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BBA Economic Digest: Re-imagining Economic Development

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Re-imagining Economic Development

As a result of the COVID-19 pandemic, economic developers have the opportunity to design a new future of their profession, building on lessons learned and practices their organizations executed during the crisis.

As the late great Yogi Berra said, "When you come to a fork in the road, take it." To suggest that economic developers will all go forward with certainty is an overstatement, but most have probably come to realize the importance of small businesses. It's what gives character and identity to a community. One suggestion that I heard recently by Jeff Finkle, president of the International Economic Development Council, during a webinar on business retention and expansion was to collect personal phone numbers and email addresses of business owners in your community. The prominence of BR&E is probably one silver-lining of the pandemic. No EDO should be an recruitment-only organization, as that clearly shows a lack of balance. I include regional (multi-county) economic development organizations who can exercise the power -- if they only will -- of establishing regional protocols and uniform systems for BR&E. And then track the information as it will tell you more about your region than you ever thought you knew. Now is the time for EDOs to listen to their customers, rethink their missions and services, and re-imagine what economic development is. We at BBA can help.

How the Airlines Survive the Coronavirus

The Airports Council International estimates the air travel industry has lost 4.6 billion passengers and nearly $100 billion for this year alone. And as a result, we're starting to see what will be in the near term a painful restructuring.

Industry experts say air travelers should many changes ahead, including an intensified focus on sanitation and air purification, health screenings at security, and even more facial recognition-based boarding.

Whether those changes will be enough to bring passengers back to the skies is unclear. Some, myself included, might not feel comfortable scrammed into a cabin breathing recycled air.

It is quite likely that the Big Four that rule the skies today -- American, United, Delta, and Southwest -- will be around in post-virus America, albeit considerably smaller than they are now.

In a letter addressed to employees last week, American said that it will eliminate about 30 percent of its management and support staff to become a smaller airline.

Delta announced a similar initiative, telling employees in a memo obtained by CNN that a "smaller Delta unfortunately means fewer people will be required."

United announced that it would require management and administrative employees to take 20 unpaid days off between May 15 and September 30. The airline warned that it would need to reduce its M&A payroll by "at least" 30 percent.

The restructuring will mean not just a reduction in employees but also fewer planes and fewer seats, which will likely result in flights will be even more packed and higher prices. No doubt there will be many more virtual meetings in the future.

Photo by Nastuh Abootalebi on Unsplash

How Important Are Offices?

There is great debate now taking place on the need for offices versus a shift to a “remote first” model. Paco Ybarra, Citigroup’s head of investment banking, told The Financial Times, that relationships currently sustaining business were built from face-to-face meetings before the lockdown — “capital that we have accumulated before.” The longer people are apart, he says, the weaker those bonds become.

David Plotz of Business Insider predicts a potentially destabilizing divide between workers who get ahead by going into the office and those who work remotely and miss out on career opportunities. “Everyone who wants to manage, to run things, to influence, to jockey, to make friends, to build a network — they will clamor to work in the office,” he writes. “Almost every single ambitious person in a company will be demanding a desk at HQ.”

Going back to the office won’t be pleasant, at least at first, Anne Quito writes for Quartz. “Many workers will find a mess of masking tape, plastic sheets, police tape, floor decals, and a host of half-baked design solutions” for social distancing.

Brianne Kimmel, founder of Work Life Ventures, agrees that there is a place for a physical office to exist to the extent that it should be an optional space for employees to choose based on preferred working style.

"Working from home’s stigma has always been around a perception of a person being less relevant to the bigger picture, or a remote company being less significant," Kimmel wrote for The Guardian. "Now that we’ve got Apple, Google and Facebook going entirely remote, it’s obvious that the office is somewhat of a farce – a temple of assumed importance."

An estimated 128 million of the 150 million working Americans commute to work in a car, the rest predominantly using public transportation. Kimmel argues that any conversation about the office should start with the average commute, which last year hit over 27 minutes. A recent report said U.S. commuters wait an average of 54 hours a year stalled in traffic.

The concept of face time is used by managers who believe remote work dilutes people’s commitment to a company and inhibit creativity. But Michelle Ruiz of Vogue cites a survey where employees at large American companies spent 54 percent of their time on email, meetings, administrative tasks and “interruptions.” She calls face time “a mirage, the symbolic appearance of working (going to meetings, chatting with co-workers) but not actually getting much done.”

What we do know is that this long stretch of remote working has led somecompanies to rethink their office space. Buildings were already half-empty, according to a new report by Heda Jordan Consulting, based on access card data, Wi-Fi use and in-room sensors. In recent years, more flexible schedules have resulted in record “hidden vacancies,” with up to 50 percent of headquarters space and 65 percent in other offices going unused.

Photo by Julián Gentilezza on Unsplash

America’s Unluckiest Generation

They have worked through the slowest economic growth of any generation since the early 1800s. The oldest millennials started job-hunting during the dot-com bust. Then came the Sept. 11 attacks, the 2008 financial crisis and now the pandemic.

The Washington Post’s Andrew Van Dam calls millennials America’s “unluckiest generation.”

Starting in lower-paying jobs has been shown to reduce lifetime earnings potential. Millennials are doing the right things — they overspend less than previous generations. But they’ve had little chance to build a cash cushion, and each downturn has hit them harder than generations with more savings. “The story here is not just that it’s a bad recession, and that it’s hitting young people more, but that it’s hitting people who have already been hit,” Gray Kimbrough, an economist with American University told The Washington Post. In a 2019 working paper, Census Bureau economist Kevin Rinz used regional differences in the Great Recession’s severity to calculate that while millennial employment recovered from the Great Recession within a decade, millennial earnings never did.

Meanwhile, a new analysis by Pew Research Center shows that millennials are taking a different path in forming – or not forming – families. Millennials trail previous generations at the same age across three typical measures of family life: living in a family unit, marriage rates and birth rates. Among the findings: • Millennial men also are more likely to marry women with more education compared to past generations. • 13 percent of millennials married someone of a different race or ethnicity. • Among millennials, African Americans are less likely than whites, Hispanics or Asians to live in homes with a spouse and a child. • Nearly half of millennial moms without a college education are unmarried, while that's true for only about one in seven with a degree. • Unlike previous generations at the same age, a majority of millennials (56 percent) aren't married. Only 42 percent live with a child of their own, while in past generations that was true for between half and three-fourths. • 14 percent still live with their parents. Another 14 percent live with "other" family members, which includes siblings, grandparents, cousins or unmarried partners. • Millennial men without a college degree are particularly prone to living with parents— 21 percent of them do so.

Photo by Yaopey Yong on Unsplash

The Biggest Enemy to Economic Development

There's the old adage that you get what you pay, and I remind economic developers of that before I critique their websites, which I do at no charge. Still, most tell me that they get value from my reviews and that they will make changes as a result.

I evaluated one economic development website that was decent, but navigation was a bit confusing, a hodgepodge of sorts. Some of the best attributes of the community and resources offered were buried deep inside, requiring digging to find.

And while this particular community had a robust business retention and expansion, but you would never know it from the website. There were ample resources for those in the process of creating a new business, but little for established businesses. Like most ED websites, the focus was on business recruitment -- providing information to "tire kickers" outside the community considering investing in it rather than those that already took the investment plunge -- in other words, existing businesses. Finally, I ended my critique with one piece of advice -- a quote from the actor and martial artist Bruce Lee: "Be happy, but never satisfied."

Complacency is always the biggest enemy of economic development.

What We're Reading and Watching (A Covid Free Zone)

Richie and Rosie - Fall On My Knees/Laughing Boy (Above)

Who Wants to Run the Deadliest Big City in America? POLITICO

The Toxic Intersection of Racism and Public Space CityLab

The Conspiracy Theories That Fueled the Civil War The Atlantic

25 technologies that have changed the world

Army Ranger School Is a Laboratory of Human Endurance Outside

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