BBA Economic Digest
OK Boomer Boards
There is a growing realization among economic developers that their boards of directors should better reflect their community's workforce and population.
When I go to an economic development website and it features photos of board members, sometimes to the exclusion of staff, I often see a preponderance of older white guys like myself and not much else.
In past posts, I have spoken to this issue about mostly gender and race, but I left out age. A new report by the Center for Creative Leadership says generational diversity is important for any boards hoping to tackle big, future issues.
Keep in mind that the 20 to 39-year-old generation now accounts for half of the global workforce and is the leading global consumer group. And yet boards are disproportionately dominated by older execs. (The average age of S&P 500 board members today is 63. I suspect it's much the same for EDOs.)
A common misconception is that millennials are too young for board positions, to which I say bunk. They can and will give an EDO insight as to the direction that a community can and should take.
Just as corporate America is beginning to understand that diversity leads to greater profits by providing new ideas, so too should the economic development community.
This is one Boomer OK with that.
With Risk Comes Reward
Readers send me questions, which I welcome. If it doesn't take me hours or days to research to adequately answer, I will do my best to answer. Here's one that I got this week, from, believe it or not, a consultant in a big city:
Question: "Hey Dean, why isn't the small town where I grew up not growing, and what can be done about it?"
Answer: Economic development does not happen in a vacuum. It happens because people decide to improve conditions on the ground that would warrant or attract capital investment.
Remember, a business has to be willing to take a chance on a place with the belief that it will make money there. With risk comes reward. That is at least the hope.
For rural communities to have any chance to hold their own, much less grow, they must take it on themselves to reduce risk. They can best do that by investing in themselves -- in human resources and physical infrastructure.
We are in the midst of a 4th Industrial Revolution in which digital literacy is key. Giving people, young and old, low-cost and/or free access to digital training tools gives them the opportunity to take a lifelong, upskilling journey.
The physical relates to transportation, utilities -- most importantly broadband to fulfill digital capabilities -- but also buildings and sites.
All of this requires vision and a long-term community commitment to continuous improvement, which is what we preach here at BBA. There is no magic button.
An Abomination in Plain Sight
Don't think that the student loan crisis -- and that is exactly what it is -- doesn't have an effect on economic development. Clearly it does, and yet I don't hear it discussed much in economic development circles.
More than 44 million Americans collectively owe $1.5 trillion in student debt, $521 billion more than total credit card debt. Over time, this mounting debt pressure, coupled with slow wage growth, has instilled fear and dampened entrepreneurship.
Millennials are far more risk averse to start a business than previous generations. In 1996, young people launched 35 percent of startups. By 2014, this number was down to 18 percent.
Indeed, we haven’t seen a measurable increase in entrepreneurial activity in more than 40 years, with the rate of new businesses as a percentage of all U.S. companies dropping by 29 percent between 1977 and 2016.
About 70 percent of college graduates leave school with an average of $29,800 in debt. Even if they land a good job, they will likely be paying off their loans for many years.
A. Wayne Johnson, a top former student loan official, calls the current system “an abomination that’s in plain sight.” “A lot of people caught up in full-blown despair. I mean, any system that winds up with people committing suicide to have to get out of is a problem," Johnson told Yahoo Finance.
Prepare to Win
I've been saying for some time now -- probably ad nauseum for some of you -- that kaizen, a mindset and system of continuous improvement, is well suited for economic development.
It is foundational to the integrated socio-technical Toyota Production System and to Nick Saban's "process" at the University of Alabama football program.
Saban said something this past week in a teleconference that all economic developers should think about. And you don't have to be a fan of college football for this to resonate. Here's the quote:
"But we’re working with every individual day in and day out to try to get them to understand not only how you have to play in the game but how you have to prepare to get ready to play in the game so that you have the best opportunity to do that."
My take: Sure, everybody wants to win capital investment and jobs, but are you willing to put in the work for that to happen?
Wishing for success is one thing. Doing is quite another. Are you willing to embark on a journey of constant, continual improvement? If you are, we can help.
About a year ago, I stayed in a ritzy resort hotel in the Washington, D.C. area, where I learned that many of the staff engaged in "super-commutes" from West Virginia.
The reason: They couldn't find affordable housing nearby. It's a huge economic development problem for much of the country, particularly California.
Apple CEO Tim Cook recently unveiled a $2.5 billion plan to help alleviate California's housing availability and affordability crisis. Cook said that Apple feels "a profound responsibility" to the region where it was born and thrived.
"It’s just unsustainable," Cook told Axios. "This problem is so big that the public sector cannot do it alone."
Many service workers, including teachers and emergency workers, now find themselves unable to live in the big cities where they work. "Super-commutes" of 90 minutes or more have become a grim regional phenomenon for many.
The tech giants are trying to be better neighbors. Facebook announced last month that it would invest $1 billion to help alleviate California's housing crisis. Google announced a $1 billion plan in June.
High housing costs should be a concern to all economic developers, especially those in large metro areas where they have reached a breaking point and is now thwarting talent from locating there.
A new report from LinkedIn's Economic Graph team, based on a study of recent job-migration patterns in the 20 largest U.S. metro areas, found that migration is slowing to high-cost regions such as the San Francisco, Seattle and Miami-Ft. Lauderdale.
South Carolina, a pro-business state if there ever was one, came to Dallas last week -- an entourage of economic developers hosting a luncheon for site consultants.
One of my favorite people in all of economic development, Bobby Hitt, was there to speak. A former newspaper editor and high-ranking executive with BMW, Hitt has been the Palmetto State's Secretary of Commerce for about nine years, having been appointed to the office by then Gov. Nikki Haley.
Hitt is one of South Carolina's not so secret weapons. Among his many strengths is his down-home, tell-it-like-it-is persona. When I'm around him, I always find myself smiling and feeling better.
It's his self-deprecating humor and the fact that he is a wonderful storyteller. (He says his brother, Jack, a contributing editor to Harper's, The New York Times Magazine, and This American Life, is better.)
But back to South Carolina. Since 2011, the state has recruited more than 1,200 economic development projects, creating more than 137,000 new jobs, representing more than $38 billion in capital investment.
During that time, manufacturing employment has grown by 19 percent. South Carolina has seen nine consecutive record years in export growth, topping $34 billion last year. The state also had the 7th highest year-over-year net tech employment growth in the U.S. in 2018.
South Carolina leads the U.S. in the export sales of tires, with 32 percent of the U.S. market and completed vehicles at 16 percent. In 2018, the state recruited more than 4,100 office, HD and R&D jobs, with new legislation tweaking incentives to better accommodate office jobs and diversify the state economy.
In terms of logistics, the Port of Charleston is handling record cargo volumes, with 2.4 million 20-foot equivalent containers in FY19. The Inland Port of Greer reported a 22 percent increase in rail moves, and Inland Port Dillon recorded a 122 percent increase from a year ago when operations were ramping up.
South Carolina will make more than $2 billion capital investments in its ports over the next decade.
Do you need a speaker who can juggle chainsaws and recite the Gettysburg Address at the same time? Well, that wouldn't be me.
But, but, but, consider that in the past year alone, I have written on a range of subjects in this Digest that would interest economic developers and business groups alike. Among them:
Rural economic development ( at least nine articles) -- What Rural Experts Should Talk About; An Essential Infrastructure; It's Time Rural Goes Digital; Advantages of Small Towns; A Rural Homecoming; One Way to Attract Talent; The True Wealth of Any Place; The Game Changer for Rural America.
Immigration (at least seven articles): A Long View on Immigration; The Immigrant Solution; Heartland Visas; The Value of Immigrant Entrepreneurs; First They Came For; Demographics Matter; The Economic Impact of Immigrants.
Finding Success in Economic Development (partial list): A Balanced Approach to ED; Beyond Recruitment; Grow Your Own; Chop Wood, Carry Water; Learn and Prosper; 10 Questions Economic Developers Should Ask Themselves; The Website Whisperer; The Problem with Strategic Plans; The Message You Send; What Economic Developers Should Do.
I continue to write about inclusive economic development and "broken capitalism" (It's not broken, but it's badly bent.); what artificial intelligence means for jobs and the workplace; and housing affordability, which we tackle again in this issue.
By the way, if you do have me to speak to your group, I promise to do no harm. I will not inflict a PowerPoint presentation on any undeserving souls that would induce coma-like symptoms. I've seen it firsthand and it is not a pretty sight.
What We're Reading
The Everything Town in the Middle of Nowhere The Verge
Andrew Yang Is Not Full of Shit Wired
So the Internet Didn't Turn Out the Way We Hoped. Now What?
The Zombie Storefronts of America CityLab
‘OK Boomer’ Wasn’t Young Americans’ First Rallying Cry Washington Post
How Trump's Trade War Went From Method to Madness Bloomberg Businessweek
Parting Thoughts: College Behind Bars
There are more than two million people incarcerated in the United States. Over two-thirds of them lack a high school diploma, and less than 13 percent have attended college.
One of the components of the 1994 Violent Crime Control and Law Enforcement Act -- which some contend was a major driver to mass incarceration in -- eliminated Pell grants that supported higher education programs in correctional facilities.
Thousands of inmates lost the chance to gain the educational skills they needed to help them find employment after release and to successfully navigate the journey back to civil society.
In response to the decimation of college-in-prison nationally, the Bard Prison Initiative was founded in 1999 by undergraduates at Bard College, a private liberal arts college in Annandale-on-Hudson, New York.
After gaining access to the New York State prison system and securing limited funding, Bard College launched BPI as a pilot program with 16 students in 2001. Since then, the program has grown dramatically. Its first associate degrees were issued in 2005 and the first bachelor’s degrees in 2008.
Today, the BPI college is spread across six interconnected prisons in New York. It enrolls over 300 students and organizes a host of extracurricular activities to replicate the breadth of college life and inquiry.
Since 2001, BPI has issued roughly 50,000 credits and 550 degrees; it offers more than 160 courses per academic year and engages an extraordinary breadth of college faculty.
When incarcerated students from the BPI Debate Union beat a team from Harvard, their victory made headlines around the world.
A new four-part PBS documentary executive produced by Ken Burns, College Behind Bars, examines the achievements of the BPI program. It will air on local PBS stations on Nov. 25 and Nov. 26 at 9/8 Central Time, and will be available for online streaming.
Of the more than 2 million men and women behind bars, 630,000 are released annually, and nearly 50 percent end up back in prison within five years. The recidivism rate for BPI graduates is 4 percent.
Said one BPI student on camera, “Prison is to punish. It’s not about creating productive beings. Individuals are not being prepared for anything other than what they’ve already been doing – crime.”
“This film challenges conventional wisdom about education and incarceration, and raises questions we urgently need to address,” said film director Lynn Novick. “What ultimately is a prison for? Who in America has access to educational opportunities? Who among us is capable of academic excellence? How can we break the cycle of recidivism? How can we have justice without redemption?”
Three Chords and the Truth (Click and Ye Shall Find.)