BBA Economic Digest

August 4, 2019

 

How many Washington, Jefferson, Jackson and Monroe counties are there in the United States? I have no clue. I could research it, but I won't.

 

Here is my point: I frequently get newsletters from economic development organizations, and sometimes it takes considerable scrolling on my part to figure out what the heck state they are located in.

 

My advice: Tell me prominently in your newsletters and/or websites what state you're in. Don't make me have to work to find out. Just this morning, I was on a website of a not-so-commonly named county. At the very bottom of the page in small print, I learned where Boomshakalaka County was.

 

Look folks, this is an easy fix, so go ahead and do it. I tell you this as a consultant who does not and never will build economic development websites. But I do know what I'm looking for.

 

For what it's worth, my friend Maureen Donohue Krauss says there are 12 Johnson counties in the U.S. She counted.

 

 

Don't Back Into the Story

 

 Many years ago when I was the business editor of a metro daily newspaper, I had a reporter on my staff who was very good, very accurate, great nose for news.

 

But in much of the copy that he would turn in to be edited, I would find the most important, interesting, attention-grabbing elements buried deep in the story. In newspaper parlance, he was burying the "lead' or "lede." He was, in fact, backing into the story, when he should have been telling the most important elements first so as to entice the readers to read more.

 

I see this all the time with economic development websites. They back into the story, and make me, the reader, work to find the most important elements.

 

Let me give you an example. Most ED websites give some attention to vocational education/training, as they should. Talent/skills matters. It is the big differentiator.

 

But invariably these ED websites will only give me links to the community/technical college with little or no commentary about what is actually being taught there. In short, I have to dig around and find it.

 

Suggestion: Publish the dang curriculum or at the very least give me an executive summary of it. That can't be too hard, and yet I seldom see it. 

 

 

Heartland Visas 

  

An economic developer asked me about companies bringing highly skilled workers into the U.S. in an unethical fashion.  Apparently, he believed significant number of  Americans were losing their jobs because of the HB-1 program.

 

Well, I'm sure there have been instances of abuse by some companies. But I believe legal immigration is vital to future economic growth in this country.

 

Occasionally, I'll read a report that makes my jaw drop. Such was the case with a recent analysis by the Economic Innovation Group and Moody's Analytics.

 

Among its findings: 80 percent of U.S. counties lost prime working-age adults between 2007 and 2017, and 65 percent will lose more over the next decade. While population decline is affecting parts of every state, the loss of the working-age population is being felt most acutely in places that are struggling economically.

 

This is simple math: lower growth in the number of people working means slower growth in economic output.

 

EIG has pitched the idea of "heartland visas," allowing communities with chronic depopulation to opt-in to hosting visa-holding immigrants to address labor shortages. I think this is a brilliant idea.

 

 

The Value of Immigrant Entrepreneurs

 

Not long ago, my wife and I had dinner at an Ethiopian restaurant. The owner came to our table after we had finished our meal to ask how we liked it. It turns out this man was a judge in Ethiopia and kisses his lucky stars that he was able to come to America and start a business.

 

His love for this country was remarkable. On the way home, I said to my wife, "My God, we need more of these people, not less. When was the last time you heard someone speak in such glowing terms about this country?"

 

Overall, immigrants constitute 15 percent of the US workforce, but a quarter of the workforce's entrepreneurs, and some 40 percent new firms have an immigrant affiliated with their start, according to the Kauffman Foundation. Immigrants are almost twice as likely to start businesses as native-born Americans.

 

The share of the most successful U.S. companies that have immigrant founders is growing, even as it is becoming more difficult for immigrants to come here. 

 

Fortune 500 companies founded by immigrants or their children employ 13.5 million people, and on average employ 11 percent more people than the average Fortune 500 company with a non-immigrant founder, according to a study by The New American Economy Research Fund

 

These companies brought in $6.1 trillion in annual revenue last year. More than half of the revenue brought in by Fortune 500 companies in New York, Washington state, Georgia, Pennsylvania among others came from companies founded by immigrants or their children.

 

 

Struggling Middle Class

 

Here is another jaw dropper that stopped me reading for a moment to ponder the consequences: In the past three decades, the median household income has risen 14 percent, while average house prices soared 290 percent.

 

American families are taking on enormous debt to maintain their middle-class status, a potential recipe for disaster if the economy takes a sharp downward turn, says the Wall Street Journal.

 

With wage growth failing to keep up with the rising costs of college, cars, medical care and housing, people are increasingly turning to financing where other generations might have bought outright, notes the Journal.

 

“Filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy,” including $4 trillion in non-mortgage consumer debt, $1.5 trillion in student loans and $1.3 trillion in auto debt.

 

Nowhere is the struggle to maintain a middle-class lifestyle more apparent than in cars. The average new-car price in the U.S. was $37,285 in June, according to Kelley Blue Book. That didn't deter buyers. The industry sold or leased at least 17 million cars each year from 2015 to 2018, its best four-year stretch ever.

 

How households earning $61,000 can acquire cars costing half their gross income is a story of the financialization of the economy. Some 85 percent of new cars in the first quarter of this year were financed, including leases, according to Experian.

 

 

Some Need More Help

 

Crime, unemployment, and inordinately high living costs can detract from a community's quality of life. 24/7 Wall St., an internet financial news group, created an index consisting of over two dozen measures to identify what it calls the "worst" cities in every state.

 

Is it fair? Probably not. Is it accurate? Well, I'm sure the economic developers in these cities identified would beg to differ. No doubt, they could make valid arguments as to why their communities should not have been included on this list, which in the end is subjective. (Which is generally my problem with "list" stories.)

 

It is interesting to note, however, that in some of these communities, the poverty rate approaches an astounding 50 percent.

 

As an economic development consultant, these are the very communities that I want to help. I don' think of communities as "best" and "worst." I just see some as needing more help than others. 

 

No doubt some of these cities have problems with crime, under-performing public school systems and where blight is widespread. Some are losing population.

 

As I like to say, it doesn't have to be that way. It shouldn't be that way.

 

 

Socialism Makes for Bad Beer 

 

As an aficionado of craft beer, business and economic development, I've long wondered if beer and socialism mixed.

 

Well, they don't, as confirmed by two economists, Robert Lawson and Benjamin Powell, in their book, "Socialism Sucks: Two Economists Drink Their Way Through the Unfree World." Among their findings: 

 

The unthinkable has happened in Venezuela on several occasions -- the country has actually run out of beer. Scratching that place off my list of places to visit.

 

Only two beers are available in Cuba -- Cristal, a light lager, and Bucanero, a dark, bock-like beer. "Both taste like Budweiser that’s been left out in the sun too long," wrote Lawson, a professor of economics at Southern Methodist University in Dallas. 

 

They two found that good beer can be had in China, but not so in neighboring North Korea. "Toxic industrial solvent is the only way to describe the taste. If I was unfortunate enough to live in North Korea, I guess I’d drink it out of necessity, and with any luck it would kill me before I starved to death or was executed by the government."

 

Finally, our daring defenders of capitalism attended the American Socialism Conference in Chicago, where they drank beer produced by Revolution Brewery, which has raised fists and red stars on its labels.

 

Revolution is the largest for-profit, independent brewer in Illinois. I love irony.

 

 

Penguins Don't Care

 

My presentation had a rather modest title, "Site Certification and the Future of Everything."

 

I was asked to speak to a gathering of economic developers who worked for BNSF Railway. Being that I'm working with the company on its BNSF Certified Sites Program, I was asked to speak on that subject.

 

Naturally, I couldn't leave it at that.  I also spoke about the Fourth Industrial Revolution, and made the bold prediction that the robots would not kill us. Well, at least not all of us. Some other main points:

 

1. Raw land is not a site but can become one with investment.

2. Site selection is inherently a risky business endeavor.

3. Site certification is about reducing risk for a company engaged in a site search. 4. Site certification is a marketing tool for communities seeking a competitive edge.

5. Precepts to site certification are control of the property, being fully served by utilities and that the property can be developed.

6. Site certification is about due diligence documentation and building an electronic file.

7. The Fourth Industrial Revolution is here and millions of jobs are at risk.

8. Two Americas, one of booming metro areas and then the rest.

9. Investment in physical infrastructure (broadband) and human resources (teaching coding in schools) would create opportunities in rural places.

10. Penguins could care less about minefields.

 

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