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BBA Economic Digest: The Expanding Divide


The Expanding Divide

Despite massive private investment, the world has not been turned on its head by automation, at least not yet. But researchers at MIT’s Task Force on the Work of the Future finds a labor market in which the fruits are so unequally distributed, so skewed towards the top, that most workers have tasted only a tiny morsel of a vast harvest.

"If we deploy automation in the same labor market system we have now, we're going to end up with the same results — an ever-expanding divide between the haves and the have-nots, " David Mindell, an engineer at MIT and one of the report's main authors told Axios. The ramifications for economic development are huge, and yet I wonder if the profession is truly ready for the challenges ahead. When innovation fails to drive opportunity, it generates fear of being left behind, a suspicion that technological progress will only benefit the country 's wealthy while threatening livelihoods of many. This fear creates political and regional divisions, distrust of institutions, and mistrust of innovation itself. (We have already seen this.) The task force found automation and AI currently had the same effect on total job numbers as past technological shifts — some jobs destroyed, others created, even as overall employment generally kept rising. The effect so far been one of augmentation rather than replacement, making individual workers more productive by automating routine tasks.

The challenge ahead for economic developers, working in concert with employers, is to advance job opportunities to their constiuents -- the workforce in their respective communities -- to meet, complement, and shape technological innovations. It will require modernizing laws and regulations and rethinking entire organizations. I foresee a future in which economic development organizations will largely become workforce development organizations to advance job training and opportunities in their communities.

Turning the Dollar

Michael Render, the rapper and activist known as Killer Mike, says that investing in the Black community will yield returns for everyone. “I’m a product of public and private cooperation,” he told New York Times DealBook’s Andrew Ross Sorkin last week for the DealBook Online Summit. “I’m a product of believing in one’s self and turning the dollar in the African-American community.” He was joined by Ursula Burns, the former chairman and chief executive of Xerox, and Robert Smith, the chairman and chief executive of Vista Equity Partners, for a wide-ranging talk about race and corporate America. “Our community does need some help. We need a modernization of a banking infrastructure that gets to our community.” — Robert Smith “We have given so much of this country, unequivocally, we deserve some special treatment. I don’t want welfare. I don’t need social programs to take care of everything. I want to see a targeted investment in communities.” — Killer Mike ”It’s how you give money here and give money there. How you give opportunity here and there. It’s not that we have to fight against each other. We don’t have to have a scrum in the street for a scratch of food. That’s not the country we live in.” — Ursula Burns

On Becoming a Thought Leader

There's an old adage in sales that economic developers need to know: Get to power. Unless you’re working directly with someone who has the authority to make a decision, your effort is likely ineffective. Making it all the more harder, key execs often have gatekeepers keeping you from speaking to them directly. They often will not return voicemails or emails from people they don’t know. If most senior execs aren't familiar with your community, how do you compete? It’s a matter of reach and resonance. Getting to power essentially means two things: Making sure key execs get the message and trust the messenger. When it comes to driving brand recognition, demand, and trust among executives. In its recently released 2020 B2B Thought Leadership Impact Study, LinkdIn and the marketing consultancy firm Edelman found: • 88 percent of decision makers agree that thought leadership is effective at enhancing their perceptions of an organization • 47 percent say they shared contact information after reading thought leadership • 61 percent say they’re more willing to pay a premium to work with an organization that has articulated a clear vision. How to become a thought leader? Not by writing about yourself, but on issues that give value to a target audience. If you are an economic developer and not posting truly meaningful content on LinkedIn, you are missing out bigtime. It's not about you winning an award (I've used plaques as cutting boards in my kitchen), rather it is about sharing knowledge.

Bottom line: Thought leadership takes thought.

Finding Solutions

When BBA is engaged to do a SWOT analysis -- sometimes of a community, sometimes of an economic development organization, most of the time both -- we ask questions, lots of questions. As I like to say, it's not what we know that matters but what we will find out. It means first and foremost bringing curiosity to every project, and coming at it with no pre-conceived ideas. We'll often do this as a project team -- other BBA team members and myself -- holding off-the-record, behind-closed-doors interviews. Stakeholders are assured they will not be quoted. We'll also hold focus group sessions, bringing together small groups to ask questions and "hash things out." Both the methods have their pros and cons. The private interviews are useful but time consuming. We can typically get eight done a day. The focus groups are useful but are often at the mercy of "group think," with some members refraining from offering their true beliefs in front of others. Which is why we like to do both. Doing desktop research is one thing (and necessary), but asking questions of community stakeholders is quite another. As you can imagine, it takes a lot of work. Thankfully, we have discovered that it can be done virtually via Zoom. Our aim is to come up with practical solutions, those that can be acted on for positive change.

The Bedrock of Your Community

My advice to economic developers: Never forget that small-business owners form the bedrock of your community. In the broader landscape of entrepreneurship, venture capital-backed companies are a tiny niche, comprising less than 1% of businesses in the U.S. On the other hand, enterprises with fewer than 500 employees represent 99% of U.S. businesses and employ nearly half of the U.S. workforce. The pandemic has shone a spotlight on small-business entrepreneurs who have been hit hard by lockdowns. But they also have stepped up to provide critical services and support. In doing so, they have fostered a vital sense of resilience and camaraderie. Small business entrepreneurs are often women and people of color, who least often receive VC funding. But they aren’t waiting on VC investments to start being entrepreneurial.

Tales of Amazon

Amazon has made its largest reported real estate investment in Orange County, California for the development of a new distribution facility, closing on a 31-acre site in Irvine formerly belonging to the aerospace firm Parker-Hannifin.

Amazon paid $112.5 million for the vacant site, property records indicate. It’s the most paid to date by the company in Orange County and brings the company’s local spending to more than $175 million in the past two months.

The site is expected to serve as the third planned ground-up industrial facility built specifically for Amazon in Orange County.

In Canton, Mississippi

Amazon will built a 700,000-square-foot fulfillment center in Madison County is Amazon's third fulfillment center in Mississippi, following the launch of additional locations in Byhalia and Olive Branch.

Amazon expects to create 1,000 full-time jobs once the new fulfillment center becomes operational by August 2021.

Amazon acquired a 69-acre parcel that is part of the Madison County Mega Site, which stretches across 875 acres and is owned by the Madison County Economic Development Authority. The Authority sold the site to the e-commerce giant for $800,000, according to local news reports.

Each Death Tells a Story

The country passed 12 million coronavirus cases, adding one million new cases in the past week alone. New daily cases are approaching 200,000: On Friday, the country recorded more than 198,500, a record.

At least 255,000 Americans have died from COVID-19, and hospitalizations rose beyond 82,000. We are numb to it all.

As the scale of deaths grows, our own compassion and concern fail to keep pace because of cognitive biases, says Paul Slovic, a psychologist at the University of Oregon. The mass death toll saps us of our empathy and discourages us from making the sacrifices needed to control the pandemic. For perspective, 250,000 deaths is ten times the number of American drivers and passengers killed in car crashes each year, and more than twice the number of American soldiers who died in World War I.

And while we should find 250,000 deaths commensurately more horrifying than a smaller number, we don't because of our hardwired biases. Numb as we are to the slaughter, what we should try to keep in mind is that each of these 250,000 deaths tells an individual story.

As the survivor Abel Herzberg said of the Holocaust: "There were not six million Jews murdered; there was one murder, six million times."

Fighting the pandemic and its global economic impact dominated the Group of 20 summit, which began on Saturday and continues today.

Heads of state of the world’s richest countries and the European Union spoke about the battle against the coronavirus and potential debt relief for poor countries hit hard by it.

President Trump briefly participated in the summit from the White House, but skipped the session on pandemic preparedness and instead headed to his Virginia country club for a round of golf.

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