#433. Rethinking the same old: 4 trends shaping new economic development models

Posted on | The Agurban

Here at Agracel, our primary business is economic development in rural America. So the following article from the Fourth Economy, posted by Rich Overmoyer, was especially relevant.

Rethinking the same old: 4 trends shaping new economic development models

Many traditional approaches and methods for economic development are failing to keep up with the changing nature of job creation and investment in our communities. We submit that even those traditional measures, jobs and investment totals, that have been sacrosanct for the last 50 years, are losing relevancy. Why? Here are four key observations that are creating the urgency to rethink traditional economic models, tools and measures.

1. The Rise of “Solopreneurs”

The rise of the individual as a business continues to gain pace as people choose to make a living performing functions for larger businesses or even other Solopreneurs. These individuals most often record their earnings via the IRS 1099 process and as a result do not appear in employment or unemployment statistics. This will be a challenge for many in the field of economic development as you cannot measure or help what you cannot count or see.

As of 2012 there are an estimated 106.6 million self-employed people in the US, a 14.4% increase from 2001. In some states such as California nearly 10% of the workforce is self-employed.

2. Economic Gardening

There is growing awareness of economic gardening programs. Dozens of communities and even some states are talking the economic gardening talk, and walking the walk through formal programs and support. The concept that entrepreneurs are the real community job creators has been around for some time. The Kaufman Foundation is one of the more well-known aggregators of facts and studies that prove entrepreneurs’ fundamental importance and impact.

The difficulty with economic gardening programs is that they’re usually successful in small increments rather than the big news that political leaders like to announce around economic development projects. Economic gardening programs support entrepreneurial job creation that is more often about hiring five or ten new employees.

But when viewed holistically, these entrepreneurial hires can quickly hit the thousands and then you’re getting folks excited.

3. The Deal is Dead

Like lemmings racing towards the cliff, millions of dollars are invested by economic development groups chasing companies, and by companies chasing states into fevered competition against the other. All because an announcement of 300 new jobs resonates better with politicians than 30 announcements of 10 new jobs. This may be changing for some, but not fast enough.

This deal-driven mentality blocks what is needed to support transformative economic development. Economic development must embrace a new model that supports the key variables that are needed for future economic development. These include: quality housing, training and education, innovation, healthy communities, employment

Businesses tell me that the more important things they look for are:

  • Educated workforce – Can they hire a local workforce that has the basic skills, can be readily trained for the production line, and pass a drug test?
  • Talent – Are there other local firms that have decent talent and is there a higher education group that they can work with to create career tracks (management and technical) for their people?
  • Community – If they need to recruit talent where will they live and play? Are the local schools good for their kids?
  • Taxes, incentives and sweeteners – Is the community and state responsive to creating a level tax playing field or are they looking to businesses to balance the budget?

4. Job Counts and Counting Jobs

New hires, unemployment rates and job availability are all good data points but are drastically overused when you think about the size and complexity not just of our economy, but of the global markets in which we operate.

A set of categories and corresponding measures for the fourth economy will include:

  • Investment – are companies and individuals investing in your community?
  • Talent – do you have a pipeline of educated workers?
  • Sustainability – do you consider the triple bottom line in making investment choices?
  • Place – do people enjoy living in your community?
  • Diversity – are new people including women and minorities welcomed into and supported by your community?

Has your community embraced these evolving and leading edge views of successful economic development?