BBA Economic Digest

October 13, 2019

 

An Essential Infrastructure 

 

It is no coincidence that states that have fallen furthest behind on broadband access also have some of the highest levels of poverty. Inequality and the lack of broadband access have become inherently intertwined.

 

Without reliable high-speed internet access, it is difficult for people to apply for jobs and educational programs and escape poverty. Similarly, those on limited incomes struggle to afford broadband access even where it's available.

 

Broadband has become a requirement for meaningful participation in society. It is  essential infrastructure in our digital age. But about 3 in 10 low-income Americans do not have access. Economic developers and policymakers must understand that disconnected communities will lag even further behind.

 

And the people living in those communities, often rural places, will struggle to get an education, healthcare and a good job. At a time when income inequality is at at 50-year high, this digital divide needs to be put behind us. 

 

Earlier this month, an appeals court upheld the FCC's repeal of net neutrality rules, but the court also required the agency to address concerns over how the change will affect internet access subsidies for low-income Americans.

 

I don't believe we need to wait on the FCC to do the right thing. States, working in tandem with the private sector, have the ways and means to expand broadband availability and adoption within their borders. It's just a matter of doing it. 

 

A recent project by the Pew Charitable Trusts lays out the different funding mechanisms, funding goals, incentives, and policy initiatives that states can leverage to extend services by offsetting the cost of deployment or encouraging more providers to enter the market.

 

Root, Hog, or Die

 

No community is close to being prepared for the challenges brought by artificial intelligence and automation. I believe AI is the single most important issue or factor facing communities and economic developers everywhere.

 

The reason: It will change not only how we work, but the workforce and the workplace.

 

AI is a complicated, and it is evolving. Few understand the opaque technologies involved -- how algorithms that we use every day, from spam filters to movie recommendations.

 

But as AI integrates ever more deeply into our lives, many knowledgeable observers  predict that it will be to a wrecking ball to many people's jobs. A study from Oxford Economics predicts that by 2030, over 20 million workers in the manufacturing industry will lose their jobs to robots.

 

A new report by McKinsey says that while 22 percent of all jobs in the total workforce will get "disrupted," meaning either killed or replaced by lower-paying work, it will be 10 percent higher for the African American workforce.

 

On a micro level, it will mean that all of us – carpenters, doctors and CEOs -- will need to acquire new skills and adapt to new technology. We're all going to have to "Root, Hog or Die," an old Southern euphemism referring to self reliance. (And the title of my future presentations to ED groups.)

 

If we’re going to preserve and grow our middle class and local economies, we will need to establish public/private programs of agile lifelong learning, skills retraining and upskilling across the entire occupational spectrum.

 

Workforce and economic developers who fashion together such learning programs -- which should be easily accessible, inclusive, affordable (better yet free) and largely do-it-yourself -- stand to transform their communities. I see this as the primary duty and future of economic development, in response to an AI world.

 

McKinsey reports that 50 percent of jobs today are automatable with current technology alone. Some occupations will decline, others grow, and many more will change. Hold on for what promises to be a wild ride.

 

Well, Hello There

 

A corporate executive told me of his frustration in trying to "get a quick answer to a quick question" from an economic development organization.

 

He had no problem finding the website for the local EDO. He was glad to see that it included the names and telephone numbers of staff members, which is always a good thing. 

 

So he called. And then he called again and again and again.

 

"I called four different phone numbers and nobody answered. I was pretty much forced to email, which I didn't want to do, because I didn't want them to have my email address," he said. "Maybe I'm still a little old fashion. I think automation and technology is great, but sometimes the basics of common sense customer service can be overlooked."

 

He's right, of course. An EDO is a service organization, and by serving, you make people accessible during business hours. Maybe a staff meeting was going on, but somebody should have answered the phone.

 

Maybe it's time we get back to the basics of customer service.

 

 

Car Time

 

The average American worker spent 225 hours, or well over nine full calendar days, commuting in 2018. The average commute is now just over 27 minutes, per data released in September by the U.S. Census Bureau.

 

Since 1980, American workers have lost nearly an hour a week to their commutes, the equivalent of one full-time workweek over the course of a year, according to the Washington Post. Rising commute times reflect the challenges of life in many metro areas, where many workers are forced out to far-flung suburbs and exurban areas in search of affordable homes.

 

Inadequate infrastructure is another factor. Many metro areas have put off spending on roads, bridges and public transit as their populations soared, acerbating the congestion as people try to get to and from work.

 

Research has shown that longer commutes are bad for workers, their families, their employers and the economy as a whole. People with longer commutes tend to be less physically active, with higher rates of obesity and high blood pressure as a result.

 

About three-quarters of Americans drove to work alone in 2017, on par with previous years.

 

 

The New Norm

 

For the first time in history, America’s richest billionaires are now paying a lower effective tax rate than the working class.

 

The average effective tax rate paid by the richest 400 families in the country in 2018 was 23 percent, lower than the 24.2 percent rate paid by the bottom half of American households, according to a study by economists Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley.

 

By contrast, the 400 richest in 1980 had an effective tax rate of 47 percent. In 1960, their tax rate was 56 percent. The effective tax rate paid by the bottom 50 percent, by contrast, has changed little over time.

 

The analysis, which was the subject of a recent column in the New York Times, is also notable for the detailed breakdown of the tax burden of not just the top 1 percent but also the top 0.1 percent, the top 0.01 percent and the 400 richest households.

 

The focus on the ultrarich is necessary, Saez and Zucman write, because those households control a disproportionate share of national wealth: The top 400 families have more wealth than the bottom 60 percent of households, while the top 0.1 percent own as much as the bottom 80 percent.

 

 

The Culture of Place

 

Our rich cultural tapestry is something to behold. One thing I love about America is our mishmash of cultures, races and influences. We truly have a quilt for a nation. A wonderful gumbo.

 

The culture of a place can speak to its potential value to a business, which is why it should not be ignored by economic developers. And every place has its own culture. I've seen in the Mississippi, Appalachia, the Great Plains, the Pacific Northwest, New England. I could go on and on.

 

I was recently on an economic development website, looking at the staff page, when one person, really one job title, jumped out at me -- Vice President, Human Capital and Culture. Now that makes sense.

 

More and more, companies want to go beyond just labor costs, but the fabric of a place.  How do the people think here? Can I find the kind of employees that I need here? Will my company be a good fit here? 

 

The human dimension of a place is intertwined with its culture. It is a worthy of investigation and consideration when a company is making a capital investment. Another question: "Could I see myself living here?"

 

One more thing: Also on this staff is a Director, Food, Music and Software Tech. Now how cool is that?

 

 

Among the Better

 

Because I live in Dallas, I get to meet economic developers from around the country who come here on a fairly regular basis to call on a cluster of site consultants. (Most of our work at BBA is economic development consulting, but we love helping companies, too.)

 

This past week, NC Carolina Core came calling. This a fairly new regional marketing group representing 17 economic development organizations that sit in the corridor between Winston-Salem and Fayetteville, NC. Four economic developers from this central NC region hosted a luncheon and spoke about their communities. They were:

 

Stanhope Kelly, president and CEO of the Piedmont Triad Partnership; Brent Christensen, president and CEO of the Greensboro Chamber of Commerce; Tyler Chafee, vice president of Winston-Salem Business Inc.; and Alyssa Byrd, president of Chatham Econ. Dev. Corp.

 

Within the region, there are four certified megasites of 7,200 acres, many industrial sites, urban research parks and mixed-use developments. There are also 30 colleges and universities.

 

I've long viewed this area as being among the better places in the country for manufacturing. The region has a workforce of more than 2 million, and is projected to grow by more than 1 million people during the next 25 years.

 

What We're Reading

 

How I Accidentally Wound Up Running an Outlaw Biker Gang in Ohio  Cleveland Scene

 

Hurricane Chasers: An Immigrant Work Force on the Trail of Extreme Weather  New York Times

 

Why Everything is Getting Louder  The Atlantic

 

Tulsa Searches for Graves from 1921 Race Massacre  Washington Post

 

An AI Pioneer Wants His Algorithms to Understand the 'Why'  Wired

 

What’s Lost When a Local Newspaper Withers  Bloomberg

 

 

The Best You Can Be

 

Simone Biles became the most decorated female gymnast in history this past week after she took home her 22nd World Championship medal, 16 of them gold. The 22-year-old American, who has been competing since 2010, also won four gold medals at the 2016 Olympics, including the individual all-around.

 

But there is more to Simone than the medals. She has relied on her faith and family to stay focused and positive. The quotes below are from her 2016 autobiography, "Courage to Soar: A Body in Motion, A Life in Balance."

 

“I was glad to put the whole thing behind me, because I wanted every child, regardless of race, to be able to look at my Worlds win and say, I can dream big too. I wanted them to know that following your dreams—not just in gymnastics, but in everything—shouldn’t have anything to do with the color of your skin. It should only be about finding the discipline and the courage to do the hard work.” 

 

###

 

“Just being in competition with other junior elite girls like Katelyn Ohashi and Lexie Priessman pushed me to raise my game. Once, I’d been hesitant to beat these girls because I was afraid they wouldn’t like me if I did. I now understood how wrong that thinking was. Every one of us had worked for years to earn our place in the arena. Competing my hardest in all my events was the highest form of respect I could show to them and to myself.

 

Besides, as my mom always told me, “Don’t ever compete against someone else, Simone. You don’t go out there to beat another person. You go out there to do your very best. And if your very best means that you win that competition, that’s the way it should be. If your very best means that you come in third or fourth, that’s fine too. As long as you did your best. You don’t go out there grudgingly and think, Oh, I need to beat the person. No, no, no. You go out there and be the best Simone you can be. And whatever that outcome is, we’ll take it.” 

 

 

Three Chords and the Truth

 

Filmmaker Ken Burns eight-part documentary series on country music that aired on PBS showed its universal appeal and history. Many people don't understand the African American component to the founding of country music.

 

This video, sponsored by Bank of America, truly captures country music's multi-ethnic origins and emotional messages. As a banjo player, I most heartily approve of this message.

 

 

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