Jobs Aren’t Enough

Economic development’s key measure of success is not the only approach to turning lagging economies into prosperous communities.
by | September 2011

The recent flap over a public radio show on economic development has once again raised the most fundamental question in the business: Do economic developers create jobs or simply move them around?

Here are the facts: The national radio show This American Life aired a segment in May on economic development, including a visit to a conference put on by the International Economic Development Council (IEDC). Because the show depicted the council and what it represents in such negative tones, long-time IEDC President Jeff Finkle wrote a lengthy letter of complaint, saying he felt like a guy who invited the show’s producers to a dinner party at his house, and then watched them insult the guests. Ira Glass, producer of This American Life, apologized for the segment’s snarkiness. In the end National Public Radio, which co-funds the show, apologized too.

All this was good copy, as we say in the newspaper business. In particular, Finkle deserves credit for successfully calling out the radio show for its highly negative story and eliciting an apology -- something that almost never happens. But the whole controversy obscured one valid criticism of the profession: The way job creation is used as the first, last and only measure of success.

The problem, as the radio show correctly identified, is that there is enormous pressure on politicians and the economic development experts who work for them to take credit for jobs created -- and, in some cases, jobs only supposedly created. Sometimes economic developers differentiate between good jobs and lousy jobs, mostly by looking at the hourly or annual wage scales of the jobs -- but usually the headline simply telegraphs the number of jobs a state or locality has produced. As the radio show pointed out, at times politicians go to hilarious lengths to take credit, as when Missouri Gov. Jay Nixon held a press conference to celebrate the creation of eight jobs.

So in the same way that teachers are expected to deliver test scores rather than educated children, economic developers are expected to deliver jobs rather than prosperous communities. Hence the focus on poaching jobs from somebody else’s turf and the spotlight on poaching big companies rather than small ones.

As we all know, there’s far more to the economic development profession than jobs. Over the past 20 years, as smokestack-chasing has subsided, economic developers all across the country have done a great job of focusing on growing jobs locally rather than poaching them. But even this approach doesn’t really convey how economic development works. Ultimately, successful economic development can’t be measured only by the number of jobs or even the number of high-paying jobs that have been created.

Everybody needs a “job” in the sense that everybody needs a source of income capable of sustaining them. But prosperity today is so much more than providing everybody with a conventional job. Entrepreneurs need an entire ecosystem to support them -- financiers, lawyers, strategists and a growing workforce. Communities need wealth retained in their hometown to endow their future needs.

Different types of people need different types of jobs -- white collar, blue collar, professional, technical. As I wrote in this space in May, the next generation increasingly realizes that their future lies in the so-called “1099” economy, where temporary work is becoming the norm. They have no expectation of a traditional career path or even a traditional job.

These are the subtleties of economic development in the United States today that cannot be captured by measuring what we traditionally call “jobs.” They are measured by other things: venture capital available to local companies, skills in the workforce, the value of local philanthropic endowments, the number of startups (successful and unsuccessful) and overall household income.

The end result of all these activities is a prosperous community where people have money in their pocket and a commitment to spending it in a way that benefits both themselves and their hometown. Yes, sometimes this means smokestacks, and yes, most of the time it means jobs. But the underlying truth of that NPR segment is that there’s a difference between jobs and prosperity. If economic development is about nothing but jobs, then stealing jobs and taking credit for jobs that don’t exist will be the inevitable result.

If, on the other hand, economic development is about the enduring prosperity of communities, regions and states, you are much likelier to build a solid foundation for the future.

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