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BBA Economic Digest: Young and Resilient

Young, Resilient, Entrepreneurial

The U.S. Latino market is growing GDP at 8.6 percent, faster than China and faster than India, according to the recently published 2020 LDC U.S. Latino GDP Report.

The size of the U.S. Latino market measured by GDP was $2.6 trillion in 2018, up almost 9 percent from $2.3 trillion in 2017.

If the U.S. Latino market was its own country, it would be the 8th largest economy in the world and the largest Latino market in the world, larger than Brazil and more than twice the size of Mexico. When compared to the non-Latino U.S. cohort, the Latino cohort grew 4.5 times faster in terms of GDP, implying most of the U.S. growth came from the Latino population. Put another way, had it not been for strong growth in the U.S. Latino market, the U.S. economy would have likely contracted between 2017 and 2018. Driving growth in the U.S. economy is a young and educated Latino labor force. Latino employees entering the labor force offset declines from the outgoing Baby Boomers. Latino Donor Collaborative reports Latinos were responsible for 78 percent of the net new jobs in the labor force since the Great Recession.

Sol Trujillo — former CEO of U.S. West and Telstra, and chair of the Latino Donor Collaborative — told Axios that Latinos are helping drive huge entrepreneurial growth — many starting with just themselves and growing, or taking over for their former bosses.

"It's part of the culture," he said. "These are resilient people."

Trujillo said another contribution made by Latinos is the relative youth of the demographic, as other key cohorts age.

My take: I am finding out that what Mr. Trujillo says to be true -- youth, resilency and an entrepreneurial mindset -- during a SWOT analysis that I am currently working on in a predominate Latino community in Texas.

The Plight of Lower-Income Students

As the fall semester gets into full swing in the midst of a pandemic, schools are noticing that low-income students are the most likely to drop out or not enroll at all, raising fears that they might never get a college degree.

Hardest hit have been community colleges, which traditionally serve lower-income students and those seeking additional career skills. Enrollment at U.S. community colleges has dropped nearly 8 percent this fall, according to preliminary data from the National Student Clearinghouse Research Center. Why it matters: In many ways, community colleges are far more indicative of an existing talent pipeline as those students are more likely to remain in a community, unlike a university, where students typically leave upon graduation. When doing a SWOT analysis, I always ask to see the curriculum of a community college as I want to see the vocational skills being taught. Universities largely don't think of preparing students for a world of work, which is a big mistake.

Often, enrollment in higher education spikes in times of high unemployment and recession, as students seek additional job skills and postpone entering the workforce. But the pandemic has overturned those traditional calculations.

Why Students Don't Complete College

Some experts believe that cost is the central reason so many students fail to complete college. Others think that the weak quality of many colleges and lack of student preparation are bigger factors. This past week, a team of research economists from MIT and Harvard released a study that offers some evidence on the issue. They created a randomized clinical trial: Some high school students received a generous scholarship while others did not. The researchers then tracked the two groups. The results: The scholarship did appear to lift graduation rates: Among students who planned to attend a four-year college, 71 percent of scholarship recipients graduated within six years. Only 63 percent of students who didn’t get a scholarship graduated. The gains were largest among nonwhite students, poor students and students whose parents had not attended college. But the scholarship had no evident effect on graduation rates at community colleges. That’s a sign that educational quality is a bigger problem at many two-year colleges than tuition bills. (I've seen instances in which vocational skills training at community colleges are virtually nonexistent.)  Bottom line: A nationwide program of free college would be expensive, and many of the benefits would flow to upper-income students likely to finish anyway. But a targeted program, focusing on lower-income students, could have a big impact.

Why Soft Skills Matter

Robots and machines can do many things, but they struggle to compete with people when it comes to our ability to create, imagine, invent, and dream. The ability to think analytically and communicate will be all the more precious to employers in the future. Also, when when someone shows empathy and works well with others, that is a person with a high emotional intelligence. They, too, will be in greater demand because machines lack that.

In a virtual SWOT analysis that I'm doing for a local economic development organization, one recurrent theme that I keep hearing from stakeholders is that many younger people are lacking in needed soft skills. While demand for candidates with strong communication skills was once specific to industries and roles that were public- or customer-facing, there is growing recognition of the importance of communication skills in almost any work setting. “Communication is core to how people interact, and therefore it’s core to how people do business effectively,” says Dan Brodnitz, the head of content strategy for LinkedIn Learning. “Anything that involves more than one person depends on communications.” This goes for employers of all shapes and sizes. Most now value widely applicable soft skills at the same level as traditional, job-specific skills. “In our research we found that 92 percent of hiring professionals tell us that soft skills are just as important as hard skills,” says Brodnitz. “That means how people work is just as important as their technical ability and ability to deliver on the work.”

Saving Capitalism From Itself

In a post COVID-19 world, a "new and improved" capitalism that takes into account social, natural, and human capital, rather than just financial gain will be required.

That all may sound like a radical propositon, but now it’s coming from Klaus Schwab, founder and executive chairman of the World Economic Forum.

Schwab maintains that it’s not capitalism itself that is the problem, but the unrestrained way that capitalism runs.

“I am convinced that the entrepreneurial strength of each individual is the driving force for real progress—and not the state,” Schwab said in an interview with German newspaper Zeit Online.

“But this individual power has to be embedded in a system of rules that prevent it from going overboard in one direction or the other. A strong state must fulfill this function. The market alone does not solve problems.”

The alternative: economic inequalities will worsen, environmental degradation will continue, and change may very well come through violent force.

Schwab contends that there will be no returning to normal. If we don’t deal with how businesses affect climate change, and if we don’t address the growing gap between the rich and poor, the pitchforks will inevitably come out. History, he says, has taught us that.

Big Developments

The Nestle Purina Petcare Co. will invest more than $450 million to transform a former Triad brewery in Eden, North Carolina into a factory that will produce dog and cat food. The St. Louis-based company could receive almost $50 million in state and local incentives to transform the former MillerCoors brewery in Eden if it meets employment and investment benchmarks. The plant, which will occupy 1.3 million square feet of building space, will eventually employ 300 with an average wage of $43,053. Nestle Purina is buying the 1,365-acre property that straddles the North Carolina-Virginia border but the sale has not closed so terms were not available.

And in Corinth, Mississippi

Mission Forest Products, a subsidiary of Timberland Investment Resources, LLC, is locating a sawmill in Corinth. The project is a $160 million corporate investment and will directly create approximately 130 jobs. The Mississippi Development Authority is providing assistance for infrastructure improvements. The company also qualifies for the Advantage Jobs Rebate Program, which provides a rebate to eligible businesses that create new jobs exceeding the average annual wage of the state or county in which the company locates or expands. Alcorn County and the City of Corinth are providing grant funds and in-kind assistance for infrastructure improvements. The ARC and TVA also are providing grant assistance for the project.

And in North Charleston, South Carolina

Boeing will consolidate 787 Dreamliner assembly in South Carolina, ending production of that jetliner in Washington state as the coronavirus pandemic saps demand for aircraft, according to The Wall Street Journal.

It wasn’t clear over what period of time the consolidation would play out, or how many employees might be affected by the move. Boeing said in July that it was studying options to handle a slowdown in demand for the 787 that has led it to reduce production.

On First Contact

Business attraction is and should be an important function for most economic development organizations. ButI have long harped on the idea -- probably ad nauseum to many of you --  that a robust business retention and expansion program should take precedence, as most new job creation originates with incumbent businesses. But if you are going to attempt contact via email with a targeted company for purposes of attraction, here are a few tips. • Ask for something small to start. It could be, "Can we connect on LinkedIn?" • Show that you have done research on the company and the person you're contacting. • Personalize your message to your contact, so that he or she knows the communication is not a cut and paste message sent to multiple people. • Avoid attachments, which can overwhelm the reader or make your message appear like a sales pitch. As I like to tell economic developers, your aim is to create fans for your community, and not to make a sell. At least not intially. If they become a fan, good things will follow.

Dorie Gets His Due

The Navy has a supercarrier on the drawing boards that will be christened the USS Doris Miller.

Why it matters: It's the first to be named for an enlisted sailor and the first to be named after an African American.

Doris Miller, who went by "Dorie," was one of the first American heroes of World War II. During the attack on Pearl Harbor, as his battleship, the USS West Virginia, was sinking, Miller helped move his dying captain to better cover, then jumped behind a machine gun and shot at Japanese planes until his ammunition was gone.

As a Black sailor in 1941, he wasn't supposed to fire a gun.

What Miller did afterward was just as important: He began pulling injured sailors out of the burning, oil-covered water of the harbor, and was one of the last men to leave his ship as it sank, and continued getting sailors to safety afterward.

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