Title: Equitable Economic Development: Examples From The Field
1Equitable Economic Development Examples From The
Field
- September 23rd 2006
- Presentation for the National Resource Center for
the Healing of Racism - Calhoun County Summit On The Healing of Racism
- Denis Rhoden Jr.
- Associate
- Kirwan Institute for the Study of Race and
Ethnicity - The Ohio State University
- http//www.kirwaninstitute.org/
- rhoden.8_at_osu.edu
2Todays Presentation
- A Dynamic, Global Economic Landscape
- Equity and the Economic Development Process
- Equitable Economic Development Initiatives Across
the Country - The Regional Significance of the Inner City
- Calhoun County Collaborative Advantage
- Pulling It all Together
3The American Worker Paradox
- American workers now produce over 30 more each
hour they work than ten years ago, yet the wages
of the typical American workerthe one at the
very middle of the income distributionhave risen
less than 1 since 2000. - The typical worker earns only 10 more in real
terms (adjusted for inflation) than 25 years ago,
even though overall productivity has risen much
faster. - Source Economist Inequality in America The
rich, the poor and the growing gap between them.
June 15th 2006.
4Our Charge
- Domestically the response to the global
interdependent economy has been episodic and
reactive reflecting a failure to accept the
changing competitive landscape. - Federal Reserve Chair, Ben Bernanke, recently
urged local political leaders to seriously
acknowledge the costs of globalization, and
help their constituents come to terms with
them. - Source Andrews L Edmund Fed Chief Sees Faster
Pace for Globalization New York Times August 25,
2006
5Reducing Volatility Inclusion Integration
- We are challenged at every level, to be more
inclusive and integrated - Bernankes comments encourage policymakers to
pursue strategies that meet two conditions - 1. The benefits of global economic integration
are sufficiently widely shared, and - 2. Displaced workers get the necessary training
to take advantage of new opportunities. -
- Source Andrews L Edmund Fed Chief
Sees Faster Pace for Globalization New York
Times August 25, 2006.
6A Unified Response
- Action is being taken in regions throughout the
country to implement policy that promotes
collaboration to generate productive needed to
adapt to changing conditions and global economic
hierarchies - Broadly, we need to define what the future should
look like with our collective imagination - A New Paradigm! Targeted Universalism
- What is our alternative vision?
- A model where we all grow together
- A model where we embrace collective solutions
- This vision requires collective action and will
require coalitions to be successful
7A Framework For Disparity
8Policy Mismatch?
Economic Development Is Not Simply IncentivesIt
is Public Policy Aimed at Crafting Place Level
Advantage. Who Chooses What to Invest in?
ECONOMIC DEVELOPMENT POLICY
REGULATION / LEGISLATION
PROGRAMS / PROCESSES
CONDITIONS
9The Web of Opportunity
- Opportunities in our society are geographically
dispersed or clustered - This distribution is the basis for our
understanding of a good or bad neighborhood -
- high and low opportunity communities - Your location within this web of opportunity
plays a definitive role in life potential and
outcomes - Individual characteristics still matter but the
environment plays a systematic role - Often impacting individual decision making
10Opportunity Is Dynamic Layered
11Capturing Equitable Economic Development
- Equitable economic development is a policy
strategy focused on correcting policy mismatch
from the perspective of distribution and access
to opportunity. - In particular establish regional the economic and
equity case for areas (e.g. neighborhoods,
cities, counties) and groups (e.g. African
American, rural) disconnected from opportunity.
12Why Equitable Economic Development?
- Equitable outcomes in economic development are
equally concerned with the ability to access and
the presence of opportunities - Households, businesses and individuals are being
challenged to create local opportunities within a
structure that does not that purposefully impacts
the fluidity of assets and capital. - Practices such as poaching in economic
development are the unintended consequence of
mismatches in a web of policy impacting the
fitness and productivity of assets.
13Our Response
- Geographic differences in the ability to put
assets to work because capital does not impact
the same assets the same way across space. - Largely episodic and fragmented
- Easier access to credit
- Tax Incentives
- Many More
- Where is the systematic broader policy change to
revive unproductive assets and inspire enterprise
and innovation?
14Policy Mismatches Prevail To Date
- Regions that are the most fragmented are more
economically depressed. Why? - No unified strategy for economic development
(infighting over jobs and new businesses) - A less qualified and educated work force due to
educational disparities in the region - Entry level and low skill work force spatially
isolated from suburban job opportunities - More likely to exhibit sprawling growth that
wastes public resources on new roads, sewers,
schools in undeveloped areas, while existing
resources are left to deteriorate
15Noted Concerns of Existing Paradigm
- Hyper Competitive Policy Structure
- Zero-sum game A gain is offset by another
groups loss - Jobs traveling across taxable boundaries
- Inefficient use of subsidy to meet concerns
within a typically short political life-span - Very few incentive programs allow for broader
wealth redistribution to reduce inequity
16Narrow Focus Masks Opportunities
- Static Policy Mechanisms and Underutilized
Integrated Solutions - Policy reflects perspective. Many policies are
narrowly defined (e.g. Eco. Devs Attraction,
Retention, Expansion). Few policy integrations to
address the factors impacting opportunity. - The result is competency and competitive
disparities between residents captured by
neighborhood boundaries. - Economic development professionals have limited
tools to provide comprehensive incentives - At worse forced to compete across jurisdictions
(suburban, urban), at minimum inefficient or
under leveraged use of public investment dollars.
17Poor Spatial and Racial Distribution Weakens
Collaborative Advantage
- Not seriously addressing the geographic (and
racial) outcomes - The most isolated geographiesinner city, rural
and first-ring suburbs face similar decline yet
few policy solutions exist to reduce problems
from common sources, (e.g. land use management,
infrastructure investment, education). - Joblessness, poor education are among the factors
resulting in economic and social isolation limit
meaningful interactions and sustain negative
stereotypes across groups and places.
18Regional Economic Health
- Sprawl and fragmentation harm all residents of a
region inner-city, suburbs exurbs - Equity-based regionalism can positively impact a
regions economic health - Research suggests regions who utilize regional
policies are economically (and socially)
healthier - Outside of the West, there is only modest local
action in developing incentive-based affordable
housing programs. Nearly two-thirds of the
municipalities have incentive programs and half
have dedicated funds established. No other region
comes close to these figures - Source Pendall et al (2006). Traditional to
Reformed A Review of the Land Use Regulations in
the Nations 50 largest Metropolitan Areas.
Brookings Institution
19Equitable Economic Development In Practice
Industry-focused workforce development
Stakeholders and Policymakers focused on these
areas
MBE/SBD development
Equitable Economic Development Practice Areas
Leveraging and distributing resources
investments
Neighborhood development
20Equitable and Productive Policy
- Concern about fairness,
- BURA Predatory Loan Program
- encouraging productivity in the core, and
- Land Value Taxation (Pittsburgh and Harrisburg)
- Integration for equitable opportunity
distribution - Multiple partners and policy infrastructure
connections integrating economic and workforce
development policy (i.e. WIRED)
21Equitable Economic Development is Multi-Faceted
and Interdependent
- Tax Based Sharing Plans (Twin Cities)
- Fair Share Housing Laws (Montgomery County)
- Metropolitan-Wide School Districting
(Charlotte-Mecklenburg) - Anti-Sprawl Initiatives (Portland)
- Regional Public Transportation
- (Indiana Interfaith Group)
22Staking Claim East Baltimore
- Scale varies but the interventions are leading
to more equitable results. - In Baltimore, neighborhood economic development
resulted in an 80-acre, 800 million neighborhood
redevelopment over an 8-10 year period - 1,200 Housing Units (new and rehabilitated,
homeownership and rental) - new retail facilities a set of supportive
services - and community building activities
- up to 6,000 new jobs will be created for skill
levels ranging from high school to those with
advanced college degrees
23Local Interventions
- Layers of Policy Infrastructure
- City Ordinance
- Economic Inclusion Plan
- Cross-Sector Partners
- Anne E. Casey
- Johns Hopkins Hospital (located in neighborhood)
- Private Developers
- Planners
- Community Development Corporation
- Implementation
- Local compliance administration (East Baltimore
Development Inc.)
24Level of Greater Impact
- Regional interventions aimed at increased
productivity, equity-aware - In the Northwest North Carolina corridor
(includes Greensboro and Winston Salem, NC
regions). - Conducted CEDS funded by Dept. of Labor
- Brought together regions eight counties to
create a unified economic development strategy - Reconnected former manufacturing employees into
the design industry through educational
interventions increasing worker preparedness for
employment in the field
25Regional Interventions
- CEDS planning process occurred county to county,
local leaders in each county leveraged resident
awareness to pursue good ideas while they were
fresh - Among the themes which emerged was to take
aggressive steps to reduce social disparity.
Their research revealed, as disparity decreases,
the potential to attract new investment increased
- Receiving additional federal funding from DOL to
pursue policies aimed at linking workforce
investment and economic development
26Business Accelerator
- The Cincinnati region is about 43 percent African
American, yet African American enterprises
account for only two percent of the aggregate
revenue - The Minority Business Accelerator approach is to
deliver more sizable and scalable MBEs to the
market place (supply-side) as well as create a
more aggressive and robust corporate MBE
procurement environment (demand-side).
27MBA Outcomes
- Minority Business Accelerator provides an example
of a privately-led, regionally and racially aware
economic development intervention. - MBA does maintain connections with academic
institutions in particular the University of
Cincinnati and University of North Kentucky - The Cincinnati MBA generated 200 million dollars
in commitments from 15 companies regionally
located or headquartered in Cincinnati - Responsibility of tracking and reporting remain a
high priority to the MBA and its corporate
partners. Reporting is completed through a
confidential process, verified directly by
partner CEOs
28Community Benefit Agreements
- Emerging economic inclusion tools for property
development by real estate developers and
coalitions of community organizations - CBAs have been effective against limiting
potential negative externalities which can
further destabilize neighborhoods
29CBA Create Value Capacity
- Past CBAs have been successful in negotiating the
following investments in residents and
neighborhoods - a living wage requirement for workers employed in
the development - a first source hiring system, to target job
opportunities in the development to residents of
low income neighborhoods - space for a neighborhood-serving childcare
center environmentally-beneficial changes in
major airport operations - construction of parks and recreational
facilities - community input in selection of tenants of the
development and - construction of affordable housing
- CBAs are a market based, community oriented
development tool they do not require a
legislative process and provides the basis to
develop legislation that supports broad
applications based on performance
30Stakeholders in Action
- To recap, Equitable Economic Development
interventions utilize policies that address
inequity in a variety of ways. - Private Equity
- Land Use
- Worker Preparedness
- Institutional Grants
- Infrastructure
- Advocacy
- Compliance
- Business Accelerators
31Place and Life Outcomes
- Equitable Economic Development is broad,
integrated and its interventions intend to
enhance and distribute prosperity and reduce
barriers to capital for households and
businesses - Housing location determines the quality of
schools children attend, the quality of public
services, access to employment and
transportation, health risks, access to health
care and public safety - Greater access to risk capital (dynamic policy
infrastructure and an active network of deal and
policy makers) to reduce friction-barriers and
increase productivity.
32Americas Inner City in Context
- Between 1990-2000 grew to 21M residents from 17M
(or 24) - Poverty in the inner city declined to 31 from
35 during the same period. - Much of the reduction can be attributed to the
movement of poverty outside of the inner city. - Inner city economies in the 100 largest cities
are a substantial portion of the U.S. economy - 8 of U.S. private employment (9 million)
- 814,000 establishments
- Source ICIC SOICE Teleconvening
Presentation February, 2005
33Regional Productivity the Inner City
- While some inner cities are doing well in terms
of employment growth, 90 out of 100 are
under-performing their MSAs. With a wide range of
performance, on average inner cities generated 1
annual job growth (vs. 3.4 for the MSA
exclusive of IC.) - Inner city/MSA income gap is 50 (25K vs. 52K),
wage gap is 0 (both at 38K). - 77 of jobs in IC are not held by IC residents
(42 are suburban commuters and 35 are from
the rest of the city). - Source ICIC SOICE Teleconvening
Presentation February, 2005 - Notes Figures above are for the nations
100 largest inner cities
34Jobs the Inner City
- Inner cities gained jobs in the 1990s but lagged
behind the rest of the U.S. - Job growth in inner cities grew at an average
annual growth rate of 0.8 from 1995-2001, but
this lagged behind the rest of the city and MSA
(2.1 and 3.7 respectively) Sixty-one inner
cities gained jobs between 1995-2001. Of these 21
grew faster than the rest of their cities. Six
grew faster than the rest of their metropolitan
areas, including Tulsa, San Jose, Boston,
Winston-Salem, Charlotte, Augusta - The average salary of jobs located in the inner
city is 38,500, compared to 41,000 in the rest
of the city and 35,000 in the rest of the
metropolitan area. But inner city residents do
not hold the higher paying jobsinner city
residents are only half as likely to hold
professional positions as rest of city and rest
of metropolitan area residents 22 of inner city
residents are professionals, vs. 41 of rest of
central city residents, and 37 of rest of
metropolitan area residents - In 2001, at the onset of the economic downturn,
inner cities experienced a 0.2 decline in
business employment. Employment in the rest of
city and the rest of metropolitan area continued
to grow at 2.4 and 0.3 respectively. - Source ICIC, State of Inner City
Economies, 2004
35Inner City Competitiveness Drivers
Source Initiative for a Competitive Inner City
36Collaborative Advantage in Calhoun County
- Concerned with the creation of meaningful
synergies between organizations resulting in
networking, coordination, cooperation, and
collaboration. - Collaboration is information exchange, altering
activities, sharing resources, and enhancing the
capacity of another for mutual benefit and to
achieve a common purpose. - What Calhoun County institutional assets can be
leveraged to create collaborative advantage? - What would you organize around to effectively use
the newfound synergies? - Source Diebold et al. (2000) Building an
Intervention A Theoretical and Practical
Infrastructure for Planning, Implementing, and
Evaluating a Metropolitan-Wide School-To-Career
Initiative Journal Of Educational and
Psychological Consultation Vol. 11 Issue 1 pp 159
37Metropolitan Economy
- Between 2000 and 2003, the Battle
Creek-Kalamazoo, MI metropolitan area lost nearly
8700 jobs (an average of nearly 2900 per year). - 15 of the African American population (nearly
6,000 people) left the region from 2002 to 2004. - Source U.S. Census Bureau, American
Community Survey
38Poverty A Multi-racial challenge
- Calhoun County poverty suffers the same
challenges found around the U.S. (15,000 in
poverty or 11 of the total population) - African Americans are over represented 2x more
likely to be in poverty than Whites (23 versus
9) - However, there are substantially more Whites in
poverty than any other group (10,000 Whites
compared to 3,000 Blacks)
39Calhoun Collaborative Advantage
- Agency policy integration of Workforce and
Economic Development (State to Local) - State of Michigan Office of Labor and Economic
Growth - Barry / Branch / Calhoun County Workforce
Development Board - Calhoun County Economic Development Council
- Calhoun County Area Technical Center
- WIA Youth Program
- Calhoun County Intermediate School District
- Career Preparation
- Michigan Works! Workforce Development Team
- Innovating Private Partners (Pharmacia Upjohn
Company, Eaton Corporation, Stryker Corporation,
Dana Corporation, Kellogg Company) - Identify economic intersections to create policy
goals and tools from the Calhoun perspective.
40Reviving Dead Capital
- Informal sources of risk capital are critical for
entrepreneurial and start-ups. - What is informal risk capital?
- In 2003, a major source of risk capital,
household wealth represented over 325 Billion
dollars to households (about 9,084 for every
owner-occupied home in the nation) - By directly addressing how land use creates
wealth for some opportunities can be created for
all. - Source Parisi, Michael and Hollenbeck, Scott.
(2005) Individual Income Tax Returns, 2003
Statistics of Income Bulletin. Fall 2005 Vol. 25
Issue 2
41Capital Formation is a Housing Issue
- Calhoun County account for 1/6 of 1 percent of
the federal mortgage credits (approx) 491M in
2003 - Nearly eighty percent of the owner-occupied
units are White, with potential to access
approximately 322M. - In contrast, Black householders had about 27M in
potential funds that could be invested in
enterprise (12 times less than Whites) - Exactly the difference in homeownership between
Blacks and Whites in Calhoun County. - Although the credit is not cash, much like home
value represents capital that can be put to work.
- Source DataPlace, U.S. Census Bureau, Parisi,
Michael and Hollenbeck, Scott. (2005) Individual
Income Tax Returns, 2003 Statistics of Income
Bulletin. Fall 2005 Vol. 25 Issue 2
42Regional Assets, Equity Focus
- Isolation comes in many forms. Urban Calhoun is
not being infused with private capital and
investment at the same rate as peripheral
communities. - Evidence suggests however, the strongest regions
look to the core as a source of jobs, capital and
innovation. The lack of urban investment has a
powerful and negative effect on the vitality of
the entire region. - Private capital ability to reach under
productive assets is imperative to creating
strong regions and efficient markets - Examples Affordable owner-occupied housing,
expansion of CEDC role, EBDI (integration among
public and private intermediaries)
43The Need to Think in Terms of Opportunity
- A disparity model is a less-than-sufficient
framework for stimulating collaborative advantage
and broader solutions to lift all groups out of
weak economic conditions - In the global market, it is less relevant for us
as a nation to view the White experience as THE
benchmark of prosperity, because we are all
losing ground. - Opportunity structures are the resources and
services that contribute to stability and
advancement - Fair access to opportunity structures is limited
by segregation, concentration of poverty,
fragmentation, and sprawl in our regions for
low-income households and families of color - Because opportunity structures exist as a web a
multi-faceted, equity-grounded approach is needed
44Linked Fate
- Why should those living in inner-ring, outer-ring
suburbs, and exurbs care about inner-city
disparities? - A region and all its residents share a linked
fate - This issue is particularly important today
- To thrive, regions must be competitive in the
global economy - Regions cannot compete with
wasteful and redundant services,
and fragmented governments
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