Part 2: Labor Market and Economic Development Trends, Best Practices

1
Part 2 Labor Market and Economic Development
Trends, Best Practices

• Prepared for Humboldt County Workforce Investment
  Board
• October 22, 2004

2
Desired Outcomes

• Roles WIB can play
• A picture of how Humboldt County is functioning
  versus US, CA, similar rural counties
• Industries with higher average wages and growth
  potential in Humboldt Co.
• Forces affecting wage trends

• Implications of trends for investments of pubic
  funds
• Strategies recommended by economists to grow
  family wage jobs
• List of economic and workforce development
  resources

3
WIB Strategic Planning

• Full WIB Session
• Thursday, October 28, 830am-330pm
• Roys Club Upstairs, 12 for lunch
• 2. Greater Executive Committee Finish
• Friday, October 29, 800am-Noon
• Sequoia Room, HCOE
• Draft Strategic Plan at WIB meeting
• Friday, December 17, 830am-1030am

4
Today Flow of Information

• Brief review of the August presentation
• Address some areas you identified for follow up
• Characteristics of the new economy
• Best practices recommended by leading economists
• What innovative response WIBs are having

5
Roles WIB Could Play

• Required role in oversight of Title 1 WIA funds
• Education of Board and public about
• Labor market trends
• Impacts on public programs
• Relationships between market trends and different
  kinds of economic development methods to effect
  trends

• Direct public funds in strategic ways that result
  in greater competitive advantage for employers
  and greater earning power for residents
• Research and provide useful information to
  decision makers
• Influence policy making and public resource
  investment choices that impact the economy and
  labor market

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Summary Comparison of Humboldt County to the
State and Other Counties
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Labor Market Trends in CA

• Most working poor are NOT employed in sectors
  that face competition from low-wage states or
  countries
• By far more working poor are employed in RETAIL

• Growth in both high wage and low wage jobslow
  growth in middle income jobs
• Increases of part-time jobs not the problem, nor
  youth
• Different from 1960s

Sources State of California Labor Growing
Apart, The New Economy and Job Polarization in
CA, 1992-2000
8
Public Costs of Trends

• Increasingly full-time workers are reliant on
  public assistance
• Of the 21.2 billion of public assistance to
  low-income families received by California
  families in 2002, 48, or 10.1 billion, went to
  working families.
• Retail workers collectively received about 2
  billion in public assistance, twice other sectors

Source The Hidden Public Costs of Low-Wage Jobs
in CA, Zabin, Dube, Jacobs, Center for Labor
Research and Education, UC Berkeley
9
Government as a of Total Employment (includes
education)
Source EDD-LMI
10
Percent of County Residents who Work in Home
County
98.02 of Humboldt Residents work here. The rest
fly away.
11
Commute Patterns for Northern California Counties
12
Leading Economists on Rural Economic Development
Performance and Policy

• Michael Porter, PhD
• Harvard School of Business, Competitiveness in
  Rural Regions (February 2004)
• Richard Florida, PhD
• Carnegie Mellon University, The Entrepreneurial
  Society (April 2001), Technology and Tolerance
  The Importance of Diversity to High-Technology
  Growth (June 2001), Rise of the Creative Class
• Jason Henderson and Bridget Abraham
• Center for the Study of Rural America, Federal
  Reserve Bank of Kansas City, Can Rural America
  Support a Knowledge Economy?, Economic Review,
  3rd Quarter 2004.

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Leading Economists on Rural Economic Development
Performance and Policy

• Center for Workforce Preparation
• An affiliate of the US Chamber of Commerce,
  Rising to the Challenge Business Voices on the
  Public Workforce System, Spring 2004.
• Mark Drabenscott
• Center for the Study of Rural America, Federal
  Reserve Bank of Kansas City, Top ten Things to
  Reinvent Your Regions Economy, presentation 2004.

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Basic Framework for Thinking about Economic
Development

• Productivity in the private sector increases the
  standard of living in a region.
• Regional productivity increases faster when
  exporting competitive products.
• Overtime, a sustainable economy is determined by
  a regions ability to create and commercialize
  innovation.

15
Share of the Base Economy by Base Industry
Cluster
Source EDD-LMI 2004, reported payroll
16
Remember, the Base Economy includes 2 Different
Kinds of Industries

• Resource Dependent Industries
• Located near natural resources
• Serve domestic and international markets
• 62 located rural, 14 of US total
• Higher wages, but shrinking
• Here Fishing, Timber
• Can evolve and lead to innovation

17
Base Economy Traded Industries

• Sell products and services across regions,
  international
• Can locate anywhere, choose location based on
  broader competitive considerations
• DRIVERS Disproportionate influence on regional
  prosperity, economic growth, wages
• Higher productivity, higher productivity growth,
  higher average wages than support/local industries

18
Share of Total Economy by Base Industry Cluster
Source EDD-LMI 2004, reported payroll
19
Total Humboldt County Economy by All Industry
Clusters (payroll)
Source EDD-LMI, reported payroll
20
Jobs by All Clusters
21
Average Wages by Cluster
Source EDD-LMI
22
Economists on Assets of Rural Areas
People in technology businesses are drawn to
places known for diversity of thought and
open-mindedness. -Richard Florida, PhD
Rural environments should be preserved to
attract and retain peoplepolicies to improve
human capital in rural areas are
essential. -Michael Porter, PhD
23
Economists on Assets of Rural Areas
Rural counties with higher levels of natural
amenities associated with typography and water
had higher shares of high-knowledge
occupationsthe amount was not found to be
significantly related to the presence of an
interstatenew forms of infrastructure, such as
broadband access, may be critical.
-Henderson Abraham, Federal Reserve Bank of
Kansas City
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The New Economy is the Knowledge Economy

• The power of growth comes from peoples ability
  to combine education, experience and ingenuity.
• Entrepreneurs transform knowledge into new
  technologies, products and servicesbring them to
  the marketplace.
• In the 1990s, high-knowledge industries grew
  4.4 faster than all others.
• In 2001, average annual wage in high-knowledge
  industries was more than 50k, more than double
  the average in other occupations.

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Knowledge Economy Demands Higher Skills,
On-going Training

• 80 of the 23 million jobs to be created in the
  next 10 years will require some post secondary
  education.
• 40 of employers believe their employees current
  skills meet current job requirements
• Drops to 31 when project out just 2 years.
• Strongest need in manufacturing sector.

26
Balance Sheet of Liabilities and Assets for
Humboldt County as a Rural County

• LIABILITIES
• Low population density
• Remoteness from urban area
• Past dependence on resource extraction
• Weaknesses in infrastructure

• ASSETS
• Quality of life, place
• Natural resources
• Culture of entrepreneurship
• Diversity of industries
• Education system
• Proximity to airport and broadband

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Best Practices Recommended by Leading Economists

• Focus on your regions uniqueness, core
  competitive niches.
• Each region is different
• Pass the test of the Global Marketplace
• The European model
• Export out of the region

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Best Practices Recommended by Leading Economists

• Support, stimulate your industry clusters
• Critical mass for tapping markets
• Synergies in adapting technology, training
  workers
• Especially important for knowledge industries
• Collaborative networks of entrepreneurs and
  resources overcome remoteness
• Understand competitive forces on traded industries

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Best Practices Recommended by Leading Economists

• Grow the farm system, instead of buying free
  agents.
• Industrial recruiting is expensive and does not
  work in a global economy
• High growth entrepreneurs local roots, local
  wealth, local jobs
• Entrepreneurs need great coaches, lots of support

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Best Practices Recommended by Leading Economists

• Invest in your people
• Leaders make the difference
• Train for the 21st Centuryupgrade skills of
  existing workforce
• Encourage lifelong learning
• Increase educational attainment 1 increase in
  educational attainment BA translated into a
  .84 rise in concentration of high-knowledge
  occupations.
• Encourage immigration

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Best Practices Recommended by Leading Economists

• Work regionally.
• Create a home for institutional
  partnershipwork win/win
• Reinvent regional governancemake decisions as
  a region, not just independent jurisdictions
• Align efforts of government, private sector,
  universities and other institutions for more
  rapid regional economic development
• Encourage bottom-up, community based planning and
  policy development

32
Best Practices Recommended by Leading Economists

• Foster entrepreneurship.
• High quality training, great coaches
• Niche markets for agriculture, manufacturing
• High-skill service industries
• Research supports industries, innovation, new
  business start up
• Roundtables to share experience

33
Best Practices Recommended by Leading Economists

• Enrich the regions supply of equity capital.
• Find ways to invest more of the regions inside
  the region
• Explore pubic/private funding opportunities

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Best Practices Recommended by Leading Economists

• Build 21st Century Infrastructure
• Broadband
• Amenities for Quality of Life
• Good schools
• Airport

35
Best Practices Recommended by Leading Economists

• Improve and leverage local amenities.
• Scenery
• Water recreation
• Cultural and historical sites, stories
• Regional foods, tourism

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Out of WIA, many WIBs are innovating and having
success

• Re-focused program to deliver HR services to
  business
• Customized training with employers
• Employers pay 50 of costs
• EPT has high risks, difficult
• In-depth analysis of labor market, industry
  growth and gapsre-aligned resources accordingly.
• Designed and delivered employer demanded
  trainings and workshops
• Common, professional marketing of programs

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Key Messages

• Comparatively speaking, Humboldt County is faring
  well in tough times.
• The future is optimisticHumboldt County has
  assets that outweigh our liabilities.
• Were on taskLeading economists and
  practitioners recommend what were doing.
• Not just one or two big things, rather lots
  of little things, over a long time.

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Small Group Discussion

• Form a group of 3-4.
• Discuss what implications of this information?
• Identify someone to report out.

39
Large Group Discussion
What if we dont address these issues?