What’s It All For?

What’s It All For?

“Inclusive Economic Development” is the buzz from IEDC these days. In fact, across the country, programs are being developed aimed specifically at promoting economic equity and opportunity for communities and populations that were previously unexplored by economic development traditionalists. Rooted in the mantra “a rising tide lifts all boats,” these practitioners focused on attracting jobs and investment to an area under the assumption that job availability was equated with economic prosperity. To be fair, these practices were rooted in a market that valued low-cost, low-skill labor, and resulted in millions of middle-class workers who were able to walk out of high school graduation and begin their 30-year careers.

While practitioners, business owners and most certainly, laborers have witnessed and accommodated the major shifts in the markets over the past 30 years, the metric for measuring successes in economic development in communities across the nation has not shifted: number of new jobs attracted to the area.

The Old News
I recently had the pleasure of organizing a District-wide EcDev 101 presentation for Southwest Missouri. The keynote was presented by the Missouri Partnership, the statewide organization tasked specifically with attracting projects to the Show Me State – with great success, I might add. But like most things, the successes can be best seen in aggregate; when boiled down to specific localities, many of the folks in the room weren’t successful in “landing” any of the “fish” the Partnership had caught. This in no way disparages the work that they do; it merely underlines the game of numbers that small communities must play in the global marketplace.

Not surprisingly, the conversation was wrapped up with a discussion about how communities – particularly small, rural communities – can engage in EcDev through factors that they can control. From performing BRE to a high standard (focused on supporting and growing businesses), to simply having documents in order and updated should an RFP cross their desk, we outlined what a reasonable approach could look like locally. The next bit was how to effectively measure their success.

The New Old News
Economic Development practitioners and organizations have spent the last 5-10 years looking down the pike at a future that measured success very differently from the past. Traditionalists have heralded “the end of EcDev” while others found excitement at the prospect of reshaping how they do their work. New measures for success have been discussed at length, and, in the era of Economic Inclusion, I’d like to offer up a few more:

First, the elephant in the room: Number of Jobs. Practitioners and politicians the world over use this metric to promise success, illustrate success, or even accuse others’ economic development failure. Seductively “easy” to measure, this go-to has been around as long as the profession itself. It is this particular quality – longevity rooted in another era – means that it has lost much of its usefulness when it comes to understanding EcDev success. The best part is: we practitioners need not stray far to find a more useful metric: Openings vs. Applicants or, in smaller communities, Openings vs. Population. This slight shift recognizes the current market: one that is rife with low unemployment, labor skills often failing to meet the jobs market, and wages struggling to rise.

Recognizing both low unemployment and skills gaps, activities and investments that mobilize the labor force are critical to community success. Nationally, the labor force participation rate peaked in March of 2000 at 67.3%, while today it hovers around 62%. Moving the needle on this requires not only customized worker training – which many States have begun to implement – but also supportive programs that enable populations currently on the sidelines to get, and keep, a job.

What Inclusivity Looks Like
Marginalized populations – the folks that need to get engaged in the job market if the US economy hopes to continue to grow – require a different set of occupational supports that communities have not traditionally considered providing. Sociologists and economists have long known that failures in baseline education attainment (K-12), coupled with a lack of hard and soft skills training have been major barriers to entry – but employers have added to the list: 1. Pass a drug test 2. Reliable transportation 3. Reliable child care 4. Safe / sanitary / decent housing.

All of these factors have been traditionally seen as character flaws in the applicant. While the inception and impact of the opioid epidemic is far from being fully appreciated in the market, direct lines can be drawn between the atrophy in real wages and the capacity for households to save, as well as have access / affordability to a means of transportation, child care, and housing. As a result, employers are increasingly changing their hiring practices to accommodate their labor shortages – some even paying a premium to employees who simply show up as scheduled to their jobs. Meanwhile, communities have initiated activities like Housing First, but reliable transportation and child care remain major barriers.

Given all these factors – labor and skills shortages, labor force participation rate shortages, and stagnant real wages, future economic development may look much less like facilitating transactions that attract jobs, and much more like programs that facilitate work.

Post written by:
Mary Rajek, EDFP
Senior Research & Economic Development Strategist

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