Categories
Economic Development

What can economic developers really do about low wages?

The latest economic development news out of Michigan is a pledge to do something about lagging real wages, or, rather, ask state officials if they will do something about it.

Many of the state’s leading economic development organizations and private foundations have banded together under Rising Income For All to request that state policy makers adopt United Way’s ALICE (Asset Limited, Income Constrained, Employed) statistic for estimating cost-burdened households as the “universal measure of success in meeting the goal of an economy that as it grows, benefits all.”

ALICE, like predecessors such as MIT’s Living Wage Calculator, EPI’s Family Budget Estimator, and the Family Budgets tool by Texas-based Center for Public Policy Priorities, shows quantitatively why traditional metrics–unemployment rate, poverty rate, even per capita income–can provide only incomplete pictures of what economic distress looks like today to the growing ranks of cost-burdened households, especially if regional cost of living differences and inflation are ignored. According to the latest available ALICE data from United Way, 43% of Michigan households are unable to cover basic household necessities.

First, let’s give credit where credit is due. It’s been about ten years since “traditional” economic development advocacy groups started saying, at least publicly, that “not all jobs are good jobs.” Now some economic development leaders in Michigan appear ready to take another step in that direction, which, to my knowledge, is the first coordinated statewide effort among local economic developers to do so, publicly. I can’t recall anything similar in other states, but please let me know via email if you are aware of something that should be mentioned.

What gets measured gets done, as I’m sure some of the people on the Rising Income For All roster might say, so I’d call this a good sign for the future of economic development in Michigan. As an instructor, I would also give them high marks for compelling calls to action:

“For the first time ever Michigan is a low-prosperity state with a strong domestic auto industry.”

“In every county in Michigan, 30% or more of families can’t afford basic necessities.”

https://risingincomeforall.org/

There will undoubtedly be detractors. It’s not too difficult to be cynical about economic development. As the media coverage points out, as of yet the Rising Income For All supporters have not offered any specific proposals to achieve their stated objective, beyond state recognition of ALICE. They should probably be ready to explain why their advocacy for better math doesn’t appear to extend to the minimum wage.

Further, according to data from Good Jobs First, companies investing in Michigan have received state and local subsidies totaling nearly $16 billion, ranking third among states. How would Rising Income For All supporters characterize the return on investment for those projects in the interest of fighting wage stagnation?

How far are economic developers on board with the initiative prepared to go? Will they advocate for changes to the state’s tax credit programs to ensure that only companies committed to real wage increases receive subsidies? Will local economic developers encourage their boards and elected officials to make changes to tax abatement policies? Are they willing to sign an economic development non-compete agreement to improve their collective negotiating position with companies in the pursuit of Rising Income For All’s vision for inclusive prosperity?

What gets measured gets done. We shall see.

Categories
Economic Development

Memphis: Stop Comparing Yourself to Nashville

From the clips this morning: New data shows more people moving from Nashville to Memphis. The story is likely gated so here’s the portion that got my attention:

I get it, Memphis has its challenges. I don’t want to diminish them or in any way discourage data mining in service of better understanding your city or local economy. I can even forgive burying the lede in that story on the margin of error. It’s frustrating when new data is available on a topic of general interest but you can’t say anything for sure about year-to-year changes because of the margin of error.

But there’s no reason to stretch that far for talking points that can tell a more complete story about the local economy. Here are a few:

  • Nearly one out of five dollars in state gross domestic product (GDP) is generated in Shelby County.
  • Real (inflation-adjusted) GDP growth in Shelby County is averaging about 1% per year–nothing to crow about but certainly not declining.
  • Nearly 40% of the state’s transportation and warehousing industry is found in Shelby County.
  • Real value of durable goods manufacturing in Shelby County is up by more than 40% since 2010.
  • Total employment in Shelby County is growing by an average of more than 7,000 jobs per year.
  • Population growth is a challenge, as mentioned in the story, but Memphis isn’t exactly hemorrhaging residents. According to the Census Bureau’s annual population estimates, Memphis was one of 165 cities or towns in Tennessee with fewer residents in 2018 compared to 2010. But Memphis is only losing one resident per day, on average–not exactly an exodus. By contrast, the county is gaining about three per day.

From an economic development standpoint, the local economy is also very competitive in several industry clusters. According to the Institute for Strategy and Competitiveness at Harvard Business School, Shelby County ranks in the top twenty counties for medical devices (#6) and transportation and logistics (#19):

There is no question Memphis faces challenges and the city has work to do to achieve inclusive economic development for its residents. But so does Nashville, and every other fast-growing community across this country. Indeed, growth can often make that challenge more daunting. We see this in places like San Antonio, too, where community leaders are quick to compare the city to Austin. But why? The two places are very different–demographically, economically, and culturally. Perhaps they also have different goals for the future of their communities and what they can offer to residents of today, and tomorrow.

So, Memphis, by all means continue to track your performance on the metrics that speak to you. And make sure the people telling that story reflect the diversity of your wonderful city. Nashville has very little to offer to that story.

Categories
Data Releases

San Francisco again outpaces the field

San Francisco was the top performing large county economy for the second quarter in a row in 2019Q3, according to new data from the Bureau of Labor Statistics published today.

Year-over-year employment growth in San Francisco in September was 3.5%, up slightly from 3.4% in June. Davidson County (Nashville) was second again, at 3.4%. Rounding out the top five were Wake (Raleigh) at 3.3%, Maricopa (Phoenix) at 3.2%, and King (Seattle) and Travis (Austin) tied at 3.1%. Overall performance among large counties of 500,000 or more jobs was unchanged from 2019Q2, but there were fewer counties with net year-over-year losses in 2019Q3. We should not make too much of quarterly movements given the likelihood of BLS revisions to the data when the full year is available. That said, it appears job growth accelerated in Raleigh and Dallas in 2019Q3 and slowed in Las Vegas and Atlanta.

San Francisco retained its pole position in wage growth among large counties, as well, but it didn’t quite reach the milestone I discussed in November with the 2019Q2 release. The average weekly wage in San Francisco in 2019Q3 was $2,273, up 7.6% on a year-over-year basis, not adjusted for inflation. The average weekly wage in San Francisco was 93% of the average weekly wage in Santa Clara County, which is the narrowest gap for Q3 dating back to at least 2001 (it was 78% as recently as 2011). So we’re not there yet, but the day is coming soon.

Rounding out the top five for wage growth were Hamilton County (Cincinnati) at 6.4%, Wake (5.3%), Denver (5.1%), and Dallas and Tarrant (Fort Worth) tied at 4.9%. Travis (Austin) was next at 4.8%. Davidson (Nashville) was down the list a bit at a very healthy 4.1%.

Interesting side note for the Silicon Valley watchers to keep an eye on: The only large county with a net decline in the average weekly wage in 2019Q3 on a year-over-year basis was Santa Clara (-0.3%). That is the second quarter in a row finishing in the bottom two of the ranking.

Again, not to make too much of it until the revision is out, but notable that the average weekly wage was growing faster in areas of the country like Cleveland and Detroit than it was in Silicon Valley last year.

Next update with 2019Q4 will be on May 20.

Categories
Data Releases

Raleigh economy continues hot streak

For the second month in a row Raleigh, NC, is the fastest growing job market among large metropolitan areas, according to new data released today by the Bureau of Labor Statistics.

Year-over-year job growth in Raleigh was 3.7% in December, ranking first among metropolitan areas with employment of 500,000 or more. Raleigh finished the year with a net gain of about 23,000 jobs, pending a revision to the estimates expected next month by BLS. Rounding out the top five large metros were: Austin (3.5%), Dallas (3.4%), Orlando (3.3%), and San Antonio (3.2%). Nashville was at 1.7%, up by about 18,000 jobs on the year, pending the revision.

There were three large metros posting declines in December: Grand Rapids, Hartford, and Memphis.

At the state level Utah led the way in December at 3.3%, followed by Arizona (2.9%), Idaho (2.9%), Texas (2.7%), and Washington (2.5%). Wyoming, West Virginia, Vermont, and Oklahoma were in negative territory in December for the second month in a row.

Categories
Politics

MLS: Austin 2 Nashville 0

For anybody who has ever complained about how difficult it is to build things in Austin or argued about how much easier it would be to “get big things done” if the city had a strong-mayor form of government, check the headlines this week about MLS:

Quite the contrast in two cities that are frequently compared to each another. Compare the two deals and I think most people would agree that Austin came out ahead there, too.

So, make that Austin 2, Nashville 0 in this first leg. Although, I’d give Nashville the edge on their kit. I still can’t get past the logo and color scheme reminding me of cedar season.