Another week, another round of job losses -- with 3.8 million people filing for unemployment last week. It brings the total jobless tally to above 30 million with an unemployment rate inching toward that seen in the Great Depression. In the journey to reopen America, many states are lifting restrictions, allowing millions of people to return to restaurants, malls and movie theaters. But, like so much else in this crisis, it has been fraught with political battles, tensions between urban and rural areas and unease among businesses and the public.
What Did You Do?
"Daddy, what did YOU do in the Great War?" was a recruitment poster during World War I in Great Britain. A similar question will be asked at budget time of economic development organizations today.
In the days and weeks ahead, we will read many predictions about how quickly businesses and consumer spending will rebound, virtually all of it conjecture.
Suggestion: Take such predictions with a high degree of skepticism, especially now during this time of great turmoil. The "experts" frequently get it wrong.
But what will certainly will emerge over time is the extent of the damage done, not to just in jobs lost and business failings, but also to the public sector, particularly state and local governments. The demand for services will be likely more than they can handle because of reduced incoming tax revenues.
Unlike the federal government, state and local governments must balance their budgets. When less money comes in, something has to give.
Money from various federal stimulus packages will help, but not enough to forestall some cold budget decisions. Among the casualties will most likely be those economic development organizations that did not prove their overall value during this time of crisis. Tell me again, what exactly did you do?
But it may take months and even years to get back to where we were. In the meantime, hard decisions will be made on the local level, and economic development organizations (EDOs) will have to prove their value.
What ED Websites Should Show
If you were to do a casual survey of economic development websites, you would find the overwhelming majority buy into a myth. That myth, promulgated largely by consultants, is that the main focus should be on business recruitment.
To which I say bunk.
Let's take a step back. Determining your primary customer is one of the most important things that any organization can do.
I submit that the primary customers of an EDO are the existing employers and the workers in a community. Why? Because those are the lives that you change the most by your very actions. (I am repeating a basic tenet of Peter Drucker, the "father of modern management.")
First Question: If changing lives is not the mission of an EDO, then what the hell's it for? Why does it even exist?
The inconvenient truth is that the recruitment-centric model was never especially efficient even in the best of economic times for most communities, much less now. And yet I continue to see "new and improved" EDO websites being rolled out that continue to ignore business retention and expansion, where most jobs are created.
Second Question: If most jobs are created by and for your primary customers, don't you think you should first and foremost cater to their needs?
Now is the time for EDOs to adopt a more balanced approach and have it reflected it in their websites. Fyi, we'll critique your website and make suggestions at no charge.
“We’ve proven we can operate with no footprint. Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely.” -- Morgan Stanley CEO James Gorman
Don't Miss the Mutt (Laith) and Jeff Show
Business retention and expansion has always been the basis for successful economic development. In the era of COVID-19, a strong BR&E program is more essential than ever before. Tune into this conversation between Laith Wardi, president and founder of ExecutivePulse, and Jeff Finkle, president and CEO of the International Economic Development Council, for a roadmap to resilience and recovery. Wednesday, May 6 | 3:00 pm - 4:00 pm ET
McKinsey's Chilling Findings
Some 57 million U.S. jobs could be at risk in the current economic crisis—roughly twice the number that have so far applied for unemployment insurance.
That’s according to the McKinsey Global Institute's report last week on the pandemic. Among the findings:
• New jobs are quickly drying up. Consolidated data from job websites finds postings have declined by 1 million since February–a drop of 16 percent. New COVID-related jobs in healthcare and warehouses aren’t enough to offset sharp declines.
• Low wage, part-time, and minority workers are the most vulnerable. Three-quarters of all vulnerable workers earn less than $40,000 a year.
• The virus may be killing older people, but job losses are hitting the young. Workers under the age of 35 account for almost half of the job losses.
• The education divide is widening. Workers without bachelor’s degrees are twice as likely to be vulnerable as those with degrees.
McKinsey finds significant overlap between the jobs at risk because of the pandemic, and those already at risk due to automation. My take: Automation has been spreading in the workplace over the last decade and will only accelerate. It's the subject of future talks that I hope to give.
As firms’ revenues rapidly decline, people become relatively more expensive than machines. Young people, people of color, and those with less education will be most vulnerable to further dislocation in jobs such as food service or cashiers as they become automated.
Which is why retraining/upskilling is the big challenge facing all EDOs.
"We’ve seen two years’ worth of digital transformation in two months," -- Satya Nadella, CEO of Microsoft
But, But, But ...
Despite the prognostications from McKinsey, my advice is to to take all, and I mean all, economic forecasts being bandied about by economists, consultants, and pundits with skepticism. And that would be especially true during this time of great turmoil.
There’s a baffling array of predictions out there right now. I'm not suggesting that you disregard them. Just know the experts so often get these things wrong.
Will a second wave of the pandemic hammer us in the fall? Answer: We don't know. It happened in 1918.
The world is complex, which means making predictions with any degree of specificity is somewhat of a fool's game. My advice: Expect the unexpected and be ready to adapt.
"Somehow, we’ve reached the point where caring about public health has become a progressive issue, while the nation’s economy has become a conservative one. This division is false; no one should have to choose between financial annihilation and helping to spread a deadly disease." -- Keren Landmam, a physician who specializes in infectious diseases and a journalist who writes about public health.
Is College Worth It?
Billionaire investing legend Warren Buffett says it would be a “tough consideration” if he were young today and deciding whether or not to attend college amid rising tuition costs and ballooning student debt.
“I didn’t want to go to college that much when I got out of high school,” Buffett told Yahoo Finance’s editor-in-chief Andy Serwer.
Buffett, who had success as a teenage entrepreneur and investor, reluctantly applied to the University of Pennsylvania to attend its undergraduate program at Wharton because of his father. Buffett eventually transferred to the University of Nebraska.
In the U.S., there’s more than $1.6 trillion in outstanding student debt, while tuition costs have risen substantially. The 89-year-old CEO of Berkshire Hathaway said college is “very expensive.”
“Not only the four years but if I had to incur hundreds of thousands of dollars in student debt, I don’t know which decision I would make,” Buffett said.
"I don’t think it makes sense for everyone to go to college. And I’m not sure it made sense for me to go to college.”
“If we want to restart the engine that made this nation a superpower, we need to do something big. I mean really, really big: defeat-the-Nazis, land-a-man-on-the-moon, invent-the-internet big. – Barry Ritholtz, author of Bailout Nation.
Just Bring a Fork
Whenever we at BBA do free initial online consulting for economic developers -- and we've been doing quite a bit of that lately-- I begin by asking a few questions that I think go to the heart of the matter.
Now I'm not going to tell you what those questions are here, because I don't want some rascally consultant stealing them, as I stole them fair and square. (Note, the idea of an original idea is as rare as snow in the Sahara.)
But I will divulge my last question: "What is your plan for going forward?"
Sometimes I get great answers, as was the case recently with an economic developer in Mississippi. And sometimes I get deer-in-the-headlight stares and stammers.
Hey, that's Ok. How do you eat an elephant? Answer: One bite at a time.
If you want a free session with the BBA team, just let me know and we'll schedule a time to talk. Just bring a fork.
What We're Reading and Watching (Ain't No Covid Here)
Baseball and Sci-Fi Make Quite the Team Wired
Seven Free Animal Live Streams to Watch Now CNBC
The Strange and Dangerous World of America’s Big Cat People Longreads
Kent State and the War That Never Ended The New Yorker
Stephen King: This is how I deal with painful criticism CNBC
Gunslinging Rambler by Gangstagrass (below)