Economic Development

Measuring Economic Development Without Depending on Jobs

Can you have economic development without job growth?
by | September 2010

So where are the jobs? And if they're nowhere to be found, how are economic developers supposed to do their jobs?

There's a lot of evidence these days that the economy is recovering from the big crash in 2008. The stock market is much stronger than it was back then, and the housing market seems to have bottomed out. Retail sales are still sluggish but appear to be creeping upward.

But jobs are another story. From a peak of 146 million jobs in 2007, employment in the United States has dropped to around 139.8 million, according to the Bureau of Labor Statistics -- and has stubbornly remained at that level for the last 18 months, despite aggressive efforts by the Barack Obama administration to keep the economy afloat. In every previous recession over the past 50 years job growth has slowed to a halt, but it has never really gone down.

Even in the last big recession (1991 to 1993), virtually all of the 20 million jobs created in the 1980s were retained. By contrast, it could be many years before the U.S. returns to the job level the country enjoyed in 2007.

The big and persistent job loss poses a problem for economic development professionals. Especially at the state level, success in economic development is often characterized in terms of jobs. How many jobs did you create? How many jobs did you save? In the last couple of years, some economic development agencies have boasted about how they've minimized job losses -- no mean feat in this economy -- but that's not something politicians can get very excited about. After all, voters are people, and people are happier when they have jobs.

So here's a radical idea: Maybe it's time to begin measuring success in economic development differently. Maybe the sheer number of jobs isn't really the metric we should use.

After all, communities -- as well as regions and states -- base their prosperity on a wide variety of factors. These factors include their success in business and industrial sectors that are growing; the extent to which the business-generated wealth stays in the community; whether there is a good match between labor skills and labor demands; and the quality of the jobs themselves. Having a job is generally better than not having one, but as Manuel Pastor, professor of American studies and ethnicity at the University of Southern California is fond of saying about Los Angeles: "There are plenty of jobs. They're just crappy jobs."

So in a profession -- indeed, in a society -- that is so job oriented, how do you reinvent the definition of success so that it's useful and helps economic development agencies make progress in a world without jobs?

It's not easy. But here are a few ideas that are emerging across the country:

- Focus on the emerging sectors of the economy that are a good match for your community or state. This doesn't mean that everybody should go after biotech companies -- or any other panacea. But it does mean that even in this down economy, some startups and small companies are getting funded, breaking into new markets and gradually adding employees. Understanding this ecosystem of entrepreneurs and financiers, however, requires hard work to acquire deep knowledge -- and knowing which companies are best suited for your community and which are not.

- Focus on the "high value added" sectors of the economy that will add true wealth to the local economy. Jobs are fine. But they probably won't last forever. If the jobs are controlled by corporate leaders in a distant location, you're little more than just a colony of that corporate board. So look for independent companies -- especially those that engage in activities that add a lot of value in the economic chain. Instead of simply chasing factory assembly jobs, for example, try to go "upstream" in the manufacturing process to the point where local companies can convert ideas into products or products into prototypes.

- Match businesses to local labor skills. Sure, you want that sexy plant or research and development park. But can the people in your town actually do the work? Or will the result simply be that out-of-towners commute in to work at the plant, while the locals are relegated to low-wage service jobs? Your economy will be better off if you find opportunities that will provide not just jobs, but jobs the locals are qualified for.

- If the business you're luring in departs, what's left behind? Businesses usually don't last forever. So plan for the end from the beginning. If the big company leaves, are you left with a trained labor force? A marketable facility? A cluster of suppliers? The more of these, the better.

In the end, obviously economic development really is all about jobs. But the strategy you adopt might not be about luring jobs -- by which I mean any job at any cost, right now. Good jobs, long-term jobs, a labor force that can make a shift when the company leaves. Economic development is always about jobs -- but the strategy is often about something else.

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