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For Economic Development Directors, Happy Days Return

The economy has proven to be more resilient than could have been imagined a year ago. Making future growth more equitable is a priority without obvious solutions.

Construction cranes in Seattle.
Construction cranes crowd the skyline of downtown Seattle, a city that has withstood the pandemic and continues to grow. (Alan Berner / The Seattle Times/TNS)
TNS
No city enjoyed a bigger boom in the years between the Great Recession and the pandemic than Seattle. During the 2010s, its population grew by an astonishing 24 percent, the most of any major city. People were drawn by the jobs created by a metastasizing economy led by Amazon and Microsoft. Seattle recently passed Atlanta as the 10th largest metropolitan economy in the country.

“Seattle has a big target on its back,” says Brian McGowan, president of Greater Seattle Partners, the regional economic development organization. “Other regions are gunning for us.”

Like other people in his line of work, McGowan had reason to be alarmed a year ago, when the pandemic threatened to shut down the economy. Between February and April last year, King County alone lost 220,000 jobs, or nearly 20 percent of its total. With a nursing home in Kirkland experiencing the nation’s first COVID-19 outbreak, McGowan admits he grew nervous about reputational damage to the area. Throughout the pandemic, there’s been no end of speculation that the superstar cities of the past decade, such as Seattle, San Francisco and New York, would suffer from a major exodus as people sought greener, cheaper pastures as bases for remote work.

It hasn’t happened. Washington State ended up having one of the most successful pandemic responses, with per capita caseloads still in the bottom five among states. Most of the jobs in the Seattle area that were lost have been regained, with every tech worker who left the region during the first six months of the pandemic replaced by two more, according to LinkedIn migration data. 

Companies including Amazon and Facebook have launched major expansions in the Seattle area, while Tanium, an IT management and security firm, announced in December it was moving its North American headquarters to Kirkland. “Right behind my office, Google is building a huge campus in Kirkland,” McGowan says. “The cranes never slowed or stopped.”

The economic turnaround is not limited to Seattle by any means. Lots of metropolitan areas across the country – from Phoenix to Austin to Miami – are experiencing rapid rebounds. The combination of pent-up demand in the economy and the flood of federal money coming out of Washington has people in the economic development field believing 2021 has the potential to be a year like no other. “People are thinking that, frankly, with that much money hitting the street, the economy will start to rock pretty quickly,” says Jeff Finkle, president of the International Economic Development Council.

With major companies announcing workers can stay remote indefinitely or have hybrid schedules,  dividing their time between the office and home, it might be a while before downtowns fully recover. But economic development directors believe the idea that they’ll remain ghost towns is overhyped. 

“People who are responsible for downtowns in their economic development activities are going to have to think about what type of vacancy rates they’re going to have, because there will be more remote work,” Finkle says. “We don’t know what that means, maybe a 4 to 12 percent reduction in space, probably in that range – but not more than that.”

White collar work that can be done online might become more dispersed – but more likely within regions, not across the country. Amazon, which has its enormous headquarters in Seattle, announced last fall it was creating 25,000 jobs in nearby Bellevue – the same number it will eventually employ at its HQ2 in Northern Virginia. Last year, REI, an outdoor equipment company, decided not to locate its headquarters in a single Bellevue building, instead opting to spread employees around three locations in the Seattle area. (REI ended up selling its Bellevue building to Facebook.) 

Not all jobs can be done remotely, even during a pandemic. Distribution disruptions triggered by COVID-19 will mean more companies will want suppliers closer to home. The choked-off Suez Canal and backed-up container ships at the ports of Los Angeles and Long Beach have underscored the value of on-shoring and near-shoring. “A number of companies are now looking at their own footprints – what do they absolutely need to have in North America to avoid this problem in the future,” Finkle says.

Despite all the shocks of the past year, the basics of economic development still apply. Available talent and access to markets still matter most. And the performance of the American economy – despite the pandemic and other natural disasters, along with social unrest and political argument – has many development officials feeling, if not wholly confident, that at least their communities have proven to be pretty resilient. 

Things are already looking a lot better than was realistically imaginable last April.

“What gives me the most hope is we’ve all lived through something where it would be hard to throw anything more at us,” says Kenny McDonald, president and CEO of One Columbus, the economic development office for the Ohio capital region. “We feel like there’s not much we can’t handle at this point.”

Turning Inward

A lot of economic development work is typically done face to face. Companies looking to relocate or expand want to kick the tires and scout locations themselves. Recruitment was all put on hold by the pandemic, at least at first. “It wasn’t the right time to go out and tell everyone how great your city is,” McGowan says.

Instead, economic development agencies turned inward. Businesses needed to know how stay-home orders applied to them. “We shifted to a mode of gathering information from policymakers and sending it to businesses, and also in reverse,” says Mike Jacoby, president of Ohio Southeast Economic Development.

In many places, economic development agencies had a formal role in disbursing grants made to businesses by state and local governments. Everywhere, they tried to help out companies in procuring both federal Paycheck Protection Program funds and personal protective equipment for their employees. 

“We’ve always stated that our first job is to take care of the customers we have,” McDonald says. “While one part of our work was diminished, another part was accelerated by tenfold.”

As in so many other fields, meetings moved online. For Jacoby, whose office covers a 25-county region, this proved something of a blessing, freeing him and his staff from lots of time normally spent in cars. “With the shift to more virtual meetings, it allowed us to have more time to do the things that we needed to do, communicating with our businesses,” he says.

Looking forward, economic development directors in general are less likely to be full-time road warriors. Certainly, it’s going to be a while before international travel returns to pre-pandemic levels. 

Before the pandemic, it would have been “odd” suggesting to customers and clients that they could get acquainted over Zoom, McDonald says. Now, it might remain the norm. “I think the default going forward is, can we meet via Zoom first,” he says. “When you do travel, it will have a real purpose, a specific purpose."


Pursuing Equity

At the start of the pandemic, people in economic development, like practically everybody else, were busy dealing with immediate challenges. During a crisis, it’s hard to think beyond trying to plug all the leaking holes in the dike. But it’s crucial to do so. 

“When a disaster of this magnitude hits, someone’s got to be thinking about where we want to be seven to 10 years from now,” says McGowan, the Greater Seattle Partners president.

McGowan worked for the federal government during the Deepwater Horizon oil spill of 2010 and was charged with helping New Orleans and five other Gulf Coast cities mitigate the economic fallout. “That gave me a view that if you don’t focus on long-term economic recovery, you’re just prolonging the pain,” he says. “Years after Katrina, they were still struggling, despite the fact that they had all these dollars coming in.”

So what is the long-term vision? For McGowan – and many of his peers nationwide – the focus is not just on growth but equity. Too many people, particularly women and communities of color, have been left out of the equation and off the radar screens of economic development agencies. “We’ve had arguably the best decade Columbus has ever had in terms of growth and economic development, but in terms of indicators of equity, we were still struggling,” McDonald says.

Economic development directors in cities including Baltimore, Philadelphia and San Diego are all trying to figure out ways to make their economies more inclusive, and how to break age-old habits of directing the bulk of their pitches toward white-owned businesses.

Small businesses suffered severe hits during the recession, far worse than large corporations. Black-owned businesses closed at the highest rates, followed by Latino-owned businesses, then Asian-owned businesses third and female-owned next.

Getting more people in the game is not just a matter of fairness, but a potential boon to growth. McGowan says that focusing on helping women and people of color find better jobs or entrepreneurial opportunities would add $40 billion to the Seattle metro economy.

There’s no easy fix, but at least the issue is getting attention. Equity was going to be a focus for One Columbus even before the pandemic, McDonald says. The pandemic has made clear that it’s a necessity.

“To be honest, that was a hard thing to get attention on in 2019 and 2020,” he says. “It’s not so hard to get attention now.”

Alan Greenblatt is a senior staff writer for Governing. He can be found on Twitter at @AlanGreenblatt.
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