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BBA Economic Digest: Think Vibrancy

Think Vibrancy

The No. 1 factor in downtown development, as I see it, is economic vibrancy. You've got to develop a dynamic sense of place for people to want to come downtown to do business. Certainly, you want a downtown that physically looks good -- and there are various ways to do that -- but it goes farther than that. To create a healthy, vibrant downtown -- one that people will want to frequent -- you've got to develop diverse set of small businesses that lend character to the place, and then you have to take measures to grow and protect them.

Said my friend David Thornell, president and CEO of C3 of Northwest Alabama: "Just as talent recruitment and retention has become essential for business recruitment (businesses go where they find the "right fit" workforce) we must recognize that a fun and attractive downtown vibe is also essential. To attract you must be attractive -- to people and to the companies that employ them."

"I also like the way BBA team member David Gaines, principal of Goldstone Consulting, puts it.

"A vibrant downtown is like a hub in a wheel," said Gaines. "As it turns it pushes energy outwards towards the rim. A thriving Downtown will lead to revitalized neighborhoods that will benefit an entire community." Much of this is common sense, but local governments have to be proactive in taking steps to make this happen. Public/private partnerships can do wonders. As I like to say, where there is a will, there is a way.

We Should All Know Better

A few years ago, I was in an industrial park in the Southeast waiting for the local economic developer to arrive. When he did, he drove up in pickup truck with a confederate flag vanity plate in the front. When I mentioned to him that the flag would offend many -- I was actually trying to help -- he "bowed up," meaning he became defensive and angry at me. I didn't tell that story for several years, but when I did finally post about it on LinkedIn last year, one economic development consultant called me a "snowflake." Now here's the rest of the story. When I was a teenager, I put a confederate vanity plate on the front of my first car. That would have been 1971 or 1972, and I thought nothing of it. Southern pride, Southern hertage, yata, yata, yata. But at some point, I realized what that flag represented -- white superiority -- which goes back to what the confederacy stood for in protecting the institutiton of slavery. I wanted no parts of that, and I certainly didn't want anyone to think that I hated them. But intitially I was a dumbass kid who didn't know any better. We should all know better.

Postscript: I saw that same consultant at an economic development conference in January where I spoke. I should have said to him, "Hey, remember me? I'm your favorite snowflake." But I didn't.

Also, I have since learned from an economic developer who works for an electric utility that my story is now being taught as what to do and not do during a prospect visit. Of course, they could always get it from the horse's mouth.

The state of Mississippi still retains the Conferate battle flag emblem within its state flag, something that sits in the craw of many economic developers there.

“I ask our elected officials how they can be pro business and still support the Mississippi flag," said Jeffrey Rupp, director of outreach, College of Business at Mississippi State University. "That flag can mean many things but it does NOT mean economic development in the year 2020.”

The Mississippi Economic Development Council has been urging state lawmakers to adopt a new state flag since 2001 to no avail.

I think Mark Williams, senior business representative with Oakland County, Michigan, summed it up best -- "We are fighting two viruses, one in the air and the other of the heart."

Proof is in the Pudding

Truly at this point, I'm quite dismissive of most statements by businesses and organizations condemning racism. I'm sorry, but I think much of it boils down to public relations. (Yes, I am a cynic.) What will catch my attention, however, are organizations that say what they will actually do -- those that go beyond feel-good words. Words, after all, are just words. The proof is in action, sustained, long-term, committed action. A year from now, it will be interesting to look back and see who really stepped up with deeds and those that just talked. It should be quite eye opening. The proof really will be in the pudding.

In the meantime, there are a litany of questions investors, customers and employees can ask to hold a company accountable. They include:

  • Has the company completed benchmarking of where it sits on diversity?

  • Is it holding its managers accountable for improving those metrics?

  • Does the company have a chief diversity officer? Do they report to the board?

  • Is a company reconsidering referral programs that can encourage “like hiring like”?

  • Is the company diversifying its suppliers?

  • Is the company addressing the wages and living conditions of those at the bottom of the economic ladder?

If the answers are unsatisfactory, customers have power. The 1955-56 Montgomery bus boycott, which was triggered by Rosa Parks and helped Martin Luther King Jr. emerge as a national leader, was a consumer-driven event.

Value is Where It's At

Speaking yesterday with a colleague on the BBA team, he told me of a community that wasn't quite sure what it wanted or needed, but it definitely wanted a target industry study. My response: "Well, I would want to preface it with a SWOT analysis so that we would have a better understanding of the community. Basing a target industry analysis solely on labor analytics is really just an educated guessing game. But if we come to know the community, then we can serve it better." He agreed. A SWOT -- which entails questioning and listening to a lot of people -- is foundational. Without that, we're not afforded all the tools needed to offer true value. And value is where it's at. And while I like to spend time in a community, the good news is that many off-the-record, not-for-attribution interviews can be done virtually. Have Zoom, Will Travel.

Celebrated but Unrealized

Juneteenth celebrates the date in 1865, more than two years after the Emancipation Proclamation, when enslaved black Americans in Galveston, Texas, learned that they had been freed through Maj. Gen. Gordon Granger’s “General Orders, Number 3.”

Juneteenth is the oldest commemoration of the end of slavery in the United States, but hasn’t been honored as a holiday or taught in history classes throughout much of the country.

This year, as protests over police brutality and racial discrimination and injustice sweep the country, more than 460 companies, including Nike, Twitter and Lyft, committed to observing Juneteenth, with the majority offering a paid day off.

Historian Tamika Nunley notes that the original Juneteenth proclamation says "the connection heretofore existing between [former masters and slaves] becomes that between employer and hired labor"—so it's fitting for employers to make a statement.

Sen. John Cornyn, R-Texa, introduced legislation last week to make Juneteenth a federal holiday. Rep. Sheila Jackson Lee, D-Texas, introduced a similar bill in the House.

As Black Americans have progressed from being owned to becoming business owners, the undeniable truth is that Black-owned businesses are still being systematically denied financial investments in ways that inhibit wealth creation and national productivity.

We would hope that the promise of Juneteenth is to achieve racial parity in loans, investments, employment, and ownership. But that is far from true, according to the U.S. Census Bureau's Annual Business Survey, covering 2012-2017.

As of 2017, there were 5.7 million U.S. firms with paid employees, of which only 124,004 (2.2 percent) were Black-owned. During the same period, Black Americans made up 12.7 percent of the country’s population.

From 2012 to 2017, the country added roughly 320,000 new employer businesses, but only 4.6 percent (or 14,866) were Black-owned.

Women—and specifically, Black women—were also underrepresented as business owners in the survey. Women represent more than half of the U.S. population, but they owned only one in five businesses (just over 1.1 million) in 2017. This was about the same proportion as it was in 2012.

Black women owned less than 1 percent (one in 130) of the nation’s businesses in 2017, even though Black women made up 6.6 percent of the country’s population.

The underrepresentation of Black-owned and Black-woman-owned businesses throttles economic growth. Black-owned firms employed 1.2 million workers in 2017, while white-owned firms employed 56.8 million workers. About 44 percent of employees of classifiable firms worked for white-owned firms, compared to 1 percent for Black-owned firms.

From First to Tenth

Two years ago, the United States was ranked No. 1 most competitive economy in the world by the International Institute for Management Development (IMD) in Lausanne, Switzerland.

Now the U.S. ranks 10th, and has for the first time in over three decades dropped out of the top five of the world's most competitive economies.

So what happened? The IMB cites President Trump's trade policies, which have made the U.S. economy less open while also massively increasing public expenditure, thanks to a multi-billion dollar agriculture bailout necessitated by the trade war with China.

The U.S.’s trade war with China has increased uncertainty for businesses, a factor weighing on both countries’ competitiveness. China, the world’s second-biggest economy, dropped six spots to No. 20 on the IMD’s ranking.

“Trade wars have damaged both China and the USA’s economies, reversing their positive growth trajectories,” the IMD said.

The IMD’s rankings, which started in 1989, assess 63 economies on hundreds of indicators: a combination of hard data, such as employment, cost of living, and government spending, and soft data from surveys of international business executives on topics including political stability and protection of intellectual property rights.

The top five -- Singapore, Denmark, Switzerland, the Netherlands and Hong Kong -- show the strength of smaller economies in weathering global risks, the IMD said.

“The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness,” said Arturo Bris, director of the IMD World Competitiveness Center. “In part, these may be fed by the fact it is easy to find social consensus.”

What We're Reading and Watching

The Hillbilly Gypsies sing Foggy Mountain Top (Above)

Police Reform is Necessary. But How Do We Do It? NYT Mag

The Widening Office Divide Medium

Opera singer joins student for duet on national anthem Today

If You Love the Music of the Carter Family, Thank Lesley Riddle Longreads

We Can Protect the Economy From Pandemics. Why Didn't We? Wired

The Myth of the Kindly General Lee The Atlantic