The Fourth Economy team publishes a regular, semi-monthly eNewsletter, entitled Economic Architecture, which provides news, editorial insights, and stories of innovation, collaboration, economic & community development, and other drivers of the fourth economy.

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The Broad Impact of Broadband

On Friday, April 12th, President Trump and Federal Communications Commission Chairman Ajit Pai announced the repurposing of $20.4 billion from the existing Universal Service Fund, which provides subsidies to various rural telecommunication programs, to create the Rural Digital Opportunity Fund. This follows the creation of the ReConnect Program through the 2019 Farm Bill, a $600 million grant and loan program through the USDA to also support rural broadband development. On the state level, we see states like Pennsylvania making broadband infrastructure development a major priority in the $4.5 billion Restore Pennsylvania initiative. Locally, regions are grappling with how they can best fund and manage local broadband networks after being inspired by successes in Ammon, Idaho or Chattanooga, Tennessee.

Here at Fourth Economy, the impact of broadband infrastructure is rising to the top as an issue facing our clients. In the United States, roughly 20 million Americans lack access to speeds of 25 Mbps, the FCC’s minimum threshold for broadband (This is barely enough for a 4-person household to stream video). Broadband is not only important for the next tech hub or to enable the gig economy; it’s critical for business transactions, marketing of products, and further development of local economies.

As we learn more about the issues and impacts of broadband, we wanted to share two interesting points that have come into focus:

1. Broadband is not just a rural issue

While access to adequate broadband is undoubtedly an issue that is hampering growth in many parts of rural America, a 2018 Pew Research Center survey found that 13% of adults in urban areas say that access to high-speed internet was a major problem (24% of rural adults reported it as an issue in the same study).  In our work with Connect Greater Newport in Rhode Island, the lack of reliable, fast broadband has inhibited the expansion and investment in businesses in the region. In fact, the network went down on Labor Day weekend, which was the last major tourist weekend of the season. Businesses were unable to process credit cards most of the day, causing a major loss of revenue. Broadband plays a pivotal role in dense business districts as well as rural communities.  

2. Every industry relies on the internet  

Broadband supports more than tech companies, advanced manufacturing, or businesses in similar industries. During our work with agricultural communities in West Virginia, one of the most mentioned issues in the community engagement process was the lack of access to the internet. Without the internet, farmers have a difficult time marketing their products or acquiring technology to increase efficiency for their operations. As the use of robots and other technology reliant on broadband develops for agriculture, these areas need access to support their local communities and economies. This issue relating to agriculture specifically has led to organizations like the Farm Bureau adding broadband access to their platform as well as the inclusion of more funding in the 2019 Farm Bill.  

What can be done to improve access?

So, after highlighting broadband and its vast impact, the question is, what can be done to improve access? Like many development issues, collaboration and coordination between state and local stakeholders will make the process much easier. The development of public-private partnerships, nonprofit authorities or other governing bodies can play a role in funding and managing the deployment.

While these local efforts are continuing, we see federal initiatives kicking off, including the major funding allocations mentioned above. As the 2020 presidential race picks up, we hope the leaders of tomorrow, especially those looking to connect with voters in rural areas, recognize broadband for what it is – broad in its application and benefits, and central to the conversation around regional growth and development.

Worthy of Investment: The Problem with the Devaluation of Communities of Color

Andre Perry of the Brookings Institution and members of the Fair Housing Task Force recently discussed barriers to fair housing in Pittsburgh and suggested policies to promote housing equity across protected classes.

Andre Perry shared information from a recent report by the Brookings Institution that explored the devaluation of assets in black neighborhoods. The report found that, “differences in home and neighborhood quality do not fully explain the devaluation of homes in black neighborhoods.” In the nationwide study, homes in majority black neighborhoods were found to be worth 23% less than similar homes in neighborhoods with fewer black residents, even when controlling for variables like quality of home and access to amenities. This devaluation equates to an equity loss of $48,000 per home and $156 billion in lost equity across black neighborhoods nationwide.

The effect of housing devaluation has a negative impact on upward income mobility. Raj Chetty, who publishes studies with Opportunity Insights at Harvard University concluded that there is a significant racial disparity in economic mobility and that mobility varies widely across neighborhoods within cities. Their research provides support for “policies that reduce segregation and concentrated poverty in cities.”

In Pittsburgh, devaluation in majority black neighborhoods has resulted in an average 11.6% difference in home value and a -$11,919 absolute price difference. Disparities extend beyond home valuation. Homeownership rates are lower for African Americans. According to the 2010 Census, African Americans represent 26.1% of the population in Pittsburgh, but account for 16.4% of total homeowners. One-third of Pittsburgh’s African-American households own their homes, while nearly two-thirds of white households do.

The Fair Housing Task Force, organized through the City of Pittsburgh Commission on Human Relations, represents interests of protected classes under the Fair Housing Act, which include color, disability, familial status, national origin, race, religion, and sex. For the past two years, the task force has worked with 44 organizations across Pittsburgh to assemble recommendations that address fair housing access in neighborhoods across the city. These policies build off of the work of the Affordable Housing Task Force by using a fair housing lens to address long-standing racial economic disparities within housing.

Why the US Economy Needs Immigrants… and Where.

Earlier this month, President Trump made headlines by repeatedly claiming that the United States is “full”—suggesting that, therefore, new immigrants to the US would no longer be welcome.

Journalists, commentators, and others were quick to take issue with the statement. Some argued on philosophical grounds. Others took issue on a more factual basis. In one response, reporters from The Upshot at the New York Times—in characteristically astute form—pointed out that, between declining birth rates and an aging population, prime-working age population is already decreasing in many places around the US. Without immigration, these places will face a decline in their labor force in coming decades.

In other words, not only is the US (and specifically, the US labor force) not full, many places are in serious need of migration.

A few days later, President Trump further confounded critics with the suggestion that migrants to the US would be sent to so-called sanctuary cities (a ubiquitous but legally informal phrase that has been self-designated by many cities, including many of the country’s largest, as well as many counties and several states).

In response, residents and representatives of many of those jurisdictions proudly suggested that they would be happy to accept immigrants. (I was glad to read that Pittsburgh’s own Mayor Peduto said as much.) But amidst all of the rhetoric, I worry that we are collectively paying woefully insufficient attention to important economic issues that underlie the conversation about immigration and workforce.

At Fourth Economy, we encounter workforce issues throughout our work. Attracting, retaining, and preparing the workers of tomorrow is a challenge that touches nearly all of our clients, from the Agricultural System of West Virginia to the Metro Hartford, Connecticut, and throughout the US. The age distribution of the workforce is also an important factor in the framework of our Community Index.

But communities around the country are not affected equally by this ongoing challenge. One way to measure the likely challenges of future labor force needs is to look at the concentration of an area’s labor force by age. The map below shows the percentage of the resident labor force in each US county that is above 55 years-old—that is, people who are active in the labor force, but who are older than what might generally be considered prime working age (25 to 54 years-old).

Communities where the current labor force is highly concentrated among older workers are likely to face increasing economic struggles in coming years. As older workers retire, there will likely be too few younger workers to take their place. Growth will decrease. Employers in some industries will compensate through automation. In other industries, remote work will become more common. But many employers in hard-hit areas will likely relocate or close.

The confounding bit is that the communities facing labor shortages are generally not the “sanctuary” communities where the President is threatening to send more new immigrants. They are instead more likely to be rural, and politically conservative communities, as shown in the scatter plot below. (Whereas many of the countries largest, youngest, and most rapidly growing cities are sanctuary cities.) Indeed, among the counties with greatest share of their labor force over 55 years-old—what we might reasonably designate the communities most in need of new workers—92% voted for president Trump in 2016.

Those facts on the surface are not that surprising. Sure, “Trump Country” is populated by rural communities with older labor forces. But the economic implications are being glaringly overlooked. What is being used to threaten to one part of the country is, in fact, a significant threat to the economic vitality of another.

Community Gut Check: Not All Anchor Collaborations Are Created Equal

Key questions to consider when assessing the strength of your anchor collaborations.

It’s no secret that anchor institutions (anchors) – those large nonprofit enterprises, such as universities and hospitals, that are unlikely to move due to their mission, customer base, and ownership – are vital assets and economic drivers to local economies.

Read any economic impact report published by such institutions and you’ll discover their significant purchasing power. Collectively, they are spending billions on local goods and services. Dig a little deeper and you’ll find that anchors are (1) often one of the top employers within an area; (2) have significant capacity to acquire and develop property; and (3) at the nucleus of many innovation districts/hubs, making transformative discoveries with new technology.

Yet, not all anchor institutions are the same; not all are addressing issues of great importance to a community; not all communities are benefitting equally.

Anchors are also playing an increasing role in community revitalization – providing capacity for communities to respond more efficiently to local needs and, through collaborative models, ensure pathways toward equity and economic opportunity. Yet, not all anchor institutions are the same; not all are addressing issues of great importance to a community; not all communities are benefitting equally.

Nonprofit Quarterly’s recent webinar on “Remaking the Economy: Leveraging Anchor Institutions” sheds light on some of the challenges that exist for anchors in supporting local objectives, particularly in low-income and minority communities. On one end, anchors whose business models aren’t community-oriented or whose frequent changes in leadership – and subsequently, priorities – can add tension to existing partnerships. On the other end, a lack of consensus among grassroots organizations and/or the inability to frame issues and understand solutions (“the ask”), can deter anchors to get involved.

It will take a cultural shift at all levels, a shared vision and a bold champion whose committed to working together for anchor collaborations to truly be effective. Within this spectrum of difficulty, where do you and your anchor collaborations fit? Lets assess your relationship. Ask yourself these questions:

  • Are your anchors’ investments in real estate contributing to local economic growth, aligning with the economic vision of your area, and/or directly benefiting low-income and underserved neighborhoods?

  • Are you building partnerships with anchors at all levels of the organization? Is there a “community partnership” lead at the anchor? Is the imperative to be a community-oriented anchor communicated and encouraged from executive leadership?

  • Beyond local hiring and purchasing, are your anchors thinking about scaling their impact to address issues that are indirectly related to their mission but are, say, health and/or education adjacent (e.g. housing)?

  • How are your anchor collaborations measuring success? In what ways are they exploring whether or not their investments are on the right track?

  • Does your community have an intermediary, a third-party convener/entity that can help initiate a partnership, liaise with local organizations and anchors, hold one another accountable and ensure the community is at the center of its work?

  • Are anchors engaged at the start and present at the table in community-level strategic planning processes and/or strategy sessions around key areas of concern?

  • Is your anchor collaborative’s business model sustainable? Is there funding available that can support long-term engagement?

Though not an exhaustive list of things to consider when evaluating the strength and impact of your anchor institution collaborations, it’s certainly a starting point. Some of the most pressing socioeconomic challenges still persist today that widen economic disparity. Creating lasting partnerships – and doing them right – can help reverse these trends and lead to lasting change.

Do you know of any anchor collaborations that are doing things well? Let us know!

Transforming the Trendline: Pennsylvania Economic Development Association Spring Conference

This week I was pleased to be able to provide a keynote address at the Pennsylvania Economic Development Association (PEDA) Spring Conference in Harrisburg, Pennsylvania. The presentation titled “Transforming the Trendline”, focused on the State of Pennsylvania’s economy and ideas for how to improve. In addition, I was able to share the results of an economic impact study sponsored by PEDA and conducted by Fourth Economy in partnership with Econsult. This study demonstrates that the Economic Development Corporations in the state support $15.6B in economic output that includes $7.6B resulting from retained jobs; $5.1B in construction impacts and $2.8B resulting from new jobs.

While these impacts are significant, Pennsylvania is losing ground to other states that are more aggressively supporting economic and quality of place strategies. Pennsylvania’s support of economic development has been diminished drastically over the past few years. The trendline predictions over the next decade point to troubled times ahead. The economic development ecosystem is making an impact but with far fewer resources than their peers it will not be enough to change the economic realities. The call to action is now and a collaborative approach to developing a vision, goals, and the necessary tools is the only way to transform the trendline for a more prosperous future.


Opportunity Zones: Beyond the Basics

Opportunity Zones are getting a lot of hype these days, and for good reason. They are designed to funnel $6.1 trillion into distressed communities through encouraging investment of capital gains and can be used to fund real estate investment as well as investment in businesses. Oh, and these investments need to happen by December 22, 2019 to realize the full benefit the program. (If you need a quick refresher on Opportunity Zones, check out the Economic Innovation Group’s FAQs).

Since being signed into law with the 2017 Tax Act, Opportunity Zones have already been used to fund real estate development projects. While investors have been quick to implement, the rest of us are still trying to figure out what Opportunity Zones mean for communities. Below, I explain important aspects of Opportunity Zones that you can take into your next meeting with investors.

New Regulations Create a Better Deal for Business Investing

Unlike many other federal economic development programs, Opportunity Zones are not being run through the Department of Commerce or the Department of Housing and Urban Development. Because they are, essentially, a tax break, the Internal Revenue Service is responsible for their administration. The IRS has been taking suggestions from leading experts in Washington and beyond to develop the guiding regulations for Opportunity Zones, and recently released the second tranche of regulations.

Of particular interest is that the so-called 50% rule has been changed. In an effort to prevent shell companies from exploiting tax breaks, regulators previously required that businesses receive half of their gross income from within their Opportunity Zone. While this may have worked for a grocery store, it would not support businesses that were hoping to manufacture a product to be sold widely.

But that has changed. According to Bisnow,

“Under the new set of regulations, a business funded by a qualified opportunity fund and located in an opportunity zone, could qualify for the tax incentives if it meets one of three “safe harbors”: at least 50% of the hours the employees or contractors work are spent within the opportunity zone, half of the company’s services are within the area or if the management and operations are based in the designated zones.”

The new regulations also clarify that investors will be allowed to invest in and sell a business as long as the proceeds are reinvested into another Opportunity Zone, and that real estate investors will be allowed to lease and refinance their properties.

Unfortunately, this round of regulations did not address critics’ concerns for more oversight, and did not introduce any ways for tracking investment in the Zones, or how to measure positive impacts for populations currently living in Opportunity Zones.

Opportunity Zones and Economic Development Administration Funds

Adjacent government agencies are also determining how their programs will interact with Opportunity Zones. The Economic Development Administration (EDA) has taken the step to open EDA funds to eligible entities within Qualified Opportunity Zones. This means that entities in Opportunity Zones applying for EDA funds via the 2018 Notice of Funding Opportunity for Public Works and Economic Adjustment Assistance Programs have an increased level of eligibility. According to a recent EDA blog post,  since FY 2018, EDA has invested more than $13 million in 22 projects in Opportunity Zones to help communities and regions build the capacity for economic development.

If an Opportunity Zone in your area is facing a significant infrastructure challenge, EDA funds may be able to help. For example, EDA recently funded a $2.5 million replacement of flood infrastructure in an Opportunity Zone in the city of Dubuque, Iowa.

Marketing Your Opportunity Zones

Opportunity Zones are invested in by Opportunity Funds, which are run by investors, banks, and special interest firms. Targeting this wide ranging group requires a combination of collaborative strategic planning, marketing, and policy alignment.

A community driven strategic plan will help ensure that the current population’s needs and preferences are considered in the development of an Opportunity Zone. Fourth Economy has developed a planning process focused on community engagement; our Market Cards allow community members to take on the role of the developer or business owner, which leads to feasible, collaboratively designed strategic plans. This process results in a list of potential projects that have been vetted by both the community, and are financially feasible, thus forming a prospectus of investment that can be shared with Opportunity Fund investors.  

Marketing for Opportunity Zones should happen on the city, region, or state level. So far, the most success in Opportunity Zone development has been through these larger entities promoting the Zones in their jurisdiction. For example, Colorado and Alabama have set up specific website that connects investors with properties and businesses in Opportunity Zones; Co-Invest, and Opportunity Alabama. Another best practice is to hire a coordinator specifically to oversee Opportunity Zones, as the City of Baltimore has done.

Finally, all city, state, and federal policies should be aligned. If your state has a capital gains tax, and does not allow for deferment in Opportunity Zones, that could dissuade investors. Novogradac has posted a map of state tax code conformity. On a local level, cities should aim for quick permitting, and instigate policies that will protect those already living in Opportunity Zones. For example, in an effort to slow rapid neighborhood change, Philadelphia freezes taxes for residents who have lived in their homes for more than ten years.

The Blunt Truth About Marijuana Legalization

As Pennsylvania was preparing to legalize medical marijuana back in 2017, I posted a blog about the Economic Impacts of Marijuana Legalization. A lot has changed in the legal landscape since then and we have had more time to reflect on the experiences of the states blazing the legal trail, Colorado and Washington.

Colorado

In October of 2018, The Colorado Division of Criminal Justice Office of Research and Statistics released “Impacts on Marijuana Legalization in Colorado,” a report that compiles and analyzes data on marijuana-related topics.

The Denver Post summarized the positive findings of the report as follows:

  • Five years after Colorado legalized marijuana, young people are not smoking more pot than they used to, organized crime is on the rise and it’s a mixed bag as to whether legal weed has led to more dangerous driving conditions.
  • Marijuana has not impacted graduation rates or dropout rates in Colorado. Graduation rates have increased while dropout rates have decreased since 2012.

The state report did report a number of negative findings as well:

  • The number of fatalities where a driver tested positive for any cannabinoid (Delta 9 or any other metabolite) increased from 55 (11% of all fatalities) in 2013 to 139 (21% of all fatalities) in 2017.
  • Rates of hospitalization with possible marijuana exposures increased steadily from 2000 through 2015.

Other findings in the state report are mixed:

  • Felony marijuana court case filings (conspiracy, manufacturing, distribution, and possession with intent to sell) declined from 2008 to 2014, but increased from 2015 through 2017. However, felony filings in 2017 (907) were still below 2008 filings (1,431).
  • Filings in organized-crime cases followed a similar pattern, with a dip in 2012 and 2013 followed by a significant increase since 2014. There were 31 organized crime case filings in 2012 and 119 in 2017.

Colorado originally anticipated $70 million in marijuana tax collections per year, but it hit $130 million in 2015, went over $190 million in calendar year 2016 and topped $266 million in 2018.1 A 2016 estimate put the economic impact for the state of Colorado at $2.4 billion, when revenues were half of the 2018 total.

Updated April 2019: https://www.colorado.gov/pacific/revenue/colorado-marijuana-tax-data

Image result for washington state flag

Washington

In Washington, the legalization was expected to generate an estimated $388 million annually. The revenues, however, have been slow to materialize but have grown rapidly with the excise tax revenues from marijuana starting at $62 million in FY 2015, and then more than doubling to $134 million in FY 2016. In FY 2017, Washington state collected $319 million in legal marijuana income and license fees, an increase of 238 percent. While this amount is still short of the original estimates, the marijuana revenues exceed revenues from liquor by more than $113 million.2

The Washington State Caseload Forecast Council conducted an analysis of the impacts from the legalization of recreational marijuana:  

  • Between June 2008 and December 2009, the analysis showed, there were 1,312 offenses committed that resulted in felony sentences for the manufacture, delivery or possession with the intent to deliver marijuana.
  • By contrast, during an 18 month period following the opening of recreational cannabis stores in 2014, there were just 147 marijuana-related crimes that resulted in felony level sentences — a nearly 90 percent decrease.

As reported in Seattle’s Child, the 2016 Washington State Healthy Youth Survey found that “Rates of teen marijuana use have not increased since 2014, despite the changing landscape.”3

The 2016 Washington State Marijuana Impact Report found that since legalization, marijuana use in the state is higher than the national average, which is no surprise: “Washington State young adults (18-25) past-year marijuana use was 6% higher than the nation’s in 2012-2013 – Washington adults (26+) were 5% higher.”4 The report also noted an increase in fatal accidents, however the absolute number remains small: “Drivers with active THC in their blood involved in a fatal driving accidents have increased 122.2% from 2010 (16) to 2014 (23) according to the Washington State Traffic Safety Commission.”5 Finally, the report noted a small number of marijuana-related crimes reported to the Spokane Valley Police Department for January to August of 2015: possession (21), theft (14), and harassment (11).6

Conclusion

Partisans will still find enough evidence to support their positions, but at this point, the scales seem to be tipping in favor of the marijuana legalization advocates. The worst fears of the legalization opponents have not materialized, at least in terms of any chronic, long-term economic impacts. A robust debate continues regarding the health impacts of marijuana legalization, but that is another story.

Sources

1 Source: https://www.colorado.gov/pacific/revenue/colorado-marijuana-tax-data
2 Source: https://www.tre.wa.gov/portfolio-item/washington-state-marijuana-revenues-and-health/
3 Source: http://www.seattleschild.com/Washington-state-legalized-pot-how-has-that-affected-kids/ /
4 Source: http://www.riag.ri.gov/documents/NWHIDTAMarijuanaImpactReportVolume1.pdf, page 9.
5 Source: http://www.riag.ri.gov/documents/NWHIDTAMarijuanaImpactReportVolume1.pdf, page 9.
6 Source: http://www.riag.ri.gov/documents/NWHIDTAMarijuanaImpactReportVolume1.pdf, page 9.

The Inequitable Roots of Home Ownership: Systemic Racism & the Wealth Gap

In March, I was lucky enough to attend a two day Racial Equity Institute workshop. The workshop was dense – covering the creation of the concept of race, implicit bias, and systemic/ institutional racism and how it contributes to the inequitable outcomes we see today. In a future blog post, I will share some things I learned about systemic racism as it pertains to access to work, but today I’d like to focus on home ownership.

One statistic is particularly striking in revealing the scale of inequality impacting people of color today. According to the Census Bureau, in 2014 the median net worth of a white household was $102,800, versus only $9,590 for a black household. Equity in a home comprises the majority of the wealth; excluding equity in a home, the median net worth of a white household is only $33,570, and that a black household drops to $3,339. Hispanic families fare only marginally better, with a median net worth of $17,530, which drops to $6,253 absent home equity.

The history that the Racial Equity Institute covered illuminates how largely our government policies have led to that situation. This is important history to keep in mind as we work to develop new programs and policies to create economic opportunity, and as we try to explain to stakeholders why we have an obligation to redress the impacts of these policies. While the history is vast, here are three key points.

1. It all starts with land, and all of the major programs to initially settle our country were off-limits to people of color.

The 1785 Land Ordinance Act, which offered 640 acres at $1 per acre, was only available to white people. The nearly 100,000 white people who came to California after the end of the Mexican-American War were allowed to claim and own “free soil”, while slaves and free black people were banned from doing so. Additionally, the 1862 Homestead Act, which gave citizens 160 acres of land for free if they would farm it for five years, was not available for Blacks and Native Americans. According to Lui et al. in The Color of Wealth, an estimated 46 million Americans living today are descendants of Homestead Act beneficiaries.

2. The housing programs that fueled post-war wealth generation, were also largely inaccessible to people of color.

Of the approximately $120 billion in new housing financed by the VA and FHA by 1962, 98 percent of it went to white home owners. In part, this was because beginning in 1933 with redlining and continuing with racially restrictive covenants (outlawed in 1968, but still in some cases on the books), people of color were restricted to certain neighborhoods – neighborhoods in which banks would not lend. If you haven’t looked at the redlining map of your city to compare it to present-day conditions, check this out.

3. Systemic racism continues to influence access to homeownership and wealth.

The Recession disproportionately impacted people of color. In December 2011 the US Department of Justice announced a $335 million settlement with Bank of America/ Countrywide for its predatory practices that targeted black and Latino households. The settlement noted that between 2004 and 2008 roughly 200,000 African American and Latino borrowers were charged more for their mortgages than were similarly qualified white borrowers.

Of course, the picture is much more complex than this blog post can convey. If you want to learn more, PBS has compiled a list of resources on race.

And we are always interested in learning more, ourselves! So please reach out with thoughts, resources, or questions: engage@fourtheconomy.com.

What does the federal government have to do with local economic development? A lot.

At Fourth Economy, our focus is on helping communities develop strategies that will make a big impact. For major projects, that often means identifying and assisting in applying for federal assistance. The federal landscape can be confusing, especially when trying to keep up with the news out of Washington. We can help sort through the thicket of regulations to find opportunities that align with your communities plans by leveraging our experience with federal programs and our engagement with national trade groups.

One of the best groups to keep up to date with opportunities in Washington is the International Economic Development Council (IEDC).  Matt Mullin, IEDC’s Vice President of Policy & Communications heads up their policy efforts, so I reached out to him for an overview of the federal role in local community and economic development.

One of the best groups to keep up to date with opportunities in Washington is the International Economic Development Council (IEDC).  Matt Mullin, IEDC’s Vice President of Policy & Communications heads up their policy efforts, so I reached out to him for an overview of the federal role in local community and economic development.

Emily: Why do economic developers need to know what is happening on a national policy level? Don’t they have enough to deal with in their own communities?

Matt: The federal government, whether functioning well, or not, plays a significant role in what happens at the local and regional level on both a macro and micro scale.

On the macro scale, the rhetoric coming out of Washington influences the international economy. When a president is talking about trade with China it impacts business decisions that are being made about future supply chains, distribution and other factors.

On a micro level, the federal government is still spending money. While the administration is not supportive of economic development programs in their budget, congress has ignored them and has pumped more money into our key programs. These federal resources make direct impacts on the local level.

I understand that seeking federal aid in this climate can be exhausting, especially for small communities where it is hard to find the time and resources to apply for and report on grants. It is easy to make a decision to ignore the federal government during this time. That’s unfortunate, because those that are persistent have a real opportunity to get resources that have not been available in the past.

Emily: What resources does IEDC provide for economic developers to learn more about public policy and federal resources?

Matt: We provide research analysis and advocacy resources to help members remain engaged in DC. Last year, we published a guide that outlines investments in local economic development projects from different agencies is available for free download on the IEDC website. We provide federal updates in our newsletter, legislative alerts when key pieces are under consideration, and updates at key moments in legislative calendar.

We also advocate on the behalf of the profession, to the administration, to federal agencies and to congress. Furthermore, IEDC has a Public Policy Advisory Committee that informs our board on policy and legislation. This is the general membership’s voice to the IEDC board on public policy.

Emily: This administration certainly has an unconventional approach to economic development! What are some of the changes you have seen?

Matt: Their agenda for economic policy seems to be largely grounded in trade policy; tariffs, trade negotiations, NAFTA, China. Early on they had suggested they would drop multinational trade agreements in favor of bi-national. That has largely fallen on the wayside. Now they are focused on China and Canada and Mexico through revising NAFTA. Outside of that, not clear what major initiatives that they will engage in.

Previously, administrations would create focus areas. For example, the last administration took on the Investing in Manufacturing Communities Partnership. That was not a funded initiative but it put a spotlight on regional strategies for manufacturing. Programs like those do not exist currently.

Emily: What about Opportunity Zones?

Matt: Opportunity Zones are a program that was included in the 2017 tax bill. The program was something that had been worked on for some time by Economic Innovation Group in collaboration with Senators Cory Booker and Tim Scott. This is the first tax credit program since New Markets Tax Credits, which are over 10 years old. The program is under the purview of the Department of Treasury. They collaborated with the CDFI Fund to get the ball rolling, and now the Internal Revenue Service is taking it over.

It came as a bit of a surprise, and there has been some scrambling, but now all zones are identified and the regulations are being completed. No more zones will be identified for this round, but it is possible that, if all goes well, there may be future iterations. This is a bright spot in an otherwise uncertain climate for economic development and the administration has thankfully embraced it.

Emily: Are there any programs that most economic developers don’t know about that you feel are particularly useful and important?

Matt: According to the Government Accountability Office (GAO), there are 120 federal economic development programs. GAO needs to revisit this because while there are many programs that have the ability to improve the economy through investment, not all are specifically economic development oriented.

In terms of economic development programs, I think EDA is deserving of greater attention because it is the only federal agency specifically and exclusively designed to engage in economic development actions. It’s only purpose is to help local communities experiencing economic distress through investments in infrastructure, planning, and technical assistance. In fact, EDA is the lead agency for economic recovery following disaster at the federal level because it is precisely the type of work it does on a daily basis. They are the experts in economic recovery and resiliency.

EDA was created through the Public Works and Economic Development Act of 1965 (PWEDA).  Reading over the signing statement made by President Lyndon Johnson over 50 years ago reveals the relevancy of the agency to this day.

Emily: Aren’t you putting on a conference soon?

Matt: Yes. The Federal Economic Development (FED) Forum is the only annual conference of its kind. While there are lots of legislative conferences, this is the only one focused on federal economic development programs and policies. You will typically see two dozen or more agencies on our program and usually the person participating is the lead program director. At this conference, the connections that you make can translate into getting a grant, getting answers, getting assistance on bureaucratic issues that you would not otherwise have.

These are the people you want to know and form relationships with, because, even in this environment, there are still many career civil servants who believe in the work they do and want to help you.

One of the speakers I am most excited about is Fran Seegal who is the Executive Director of the U.S. Impact Investing Alliance, which is being incubated at the Ford Foundation. She will be talking about their work in standards and best practices for communities in Opportunity Zones, especially advancing community development in sync with economic development. We’ll also be welcoming the newly-confirmed head of EDA, Dr. John Fleming.

Plus, it is springtime in Washington!

Solving the Labor Shortage: Workforce Reanimation

Photo by Chad Hurst

Everywhere I turn, people are complaining about the inability to find workers for many of the open jobs in their community. We continue to identify best practices and work with communities to replicate and implement to fit their needs. What if the solution was right in front of us (or I should say under us) the whole time. Inspired by the remaking of Pet Semetary and the dozens of Zombie shows on TV, we may want to look into Worker Reanimation. Yes, can we bring back the talent that has left us and get them back at the desk, factory floor, or driving delivery vehicles!

Reanimation Training Academy

In most cases, the reanimated will probably need some job skill upgrades and maybe even some life skills updates. A training academy can be established to prescreen, support intensive training and get them back in action. Haven’t held a job/been alive since the 1800s? No problem. We’ll catch you up on what computers are in no time.

Reanimated Professionals Group

We can imagine that the reanimated may want to share experiences with their peers. Their pre-life work relationships may not align any longer with their current views and activities outside the workplace. They will want to share their pre- and post-life thoughts with people who really understand them.

Ok, so maybe I got a bit carried away, but I do think I have a story idea to pitch for the next big AMC series.

We do take the issue of labor force shortages and skill needs of residents seriously and are working with several communities to address these situations. We will make sure to share some of this exciting work – when it’s not April Fools Day.