Category Archives: Economic Development

The Populist Agenda: Jobs and Inequality

Paul Krugman links jobs and inequality in yesterday’s New York Times column.  He notes that job instability has led to deepening inequality because workers do not feel confident to search for higher paying employment.  At the same time he points to the work of Steven Fazzari that shows that inequality was a contributor to the economic collapse in 2007.  Fazzari shows that simple job creation — especially at the bottom of the income distribution — led to significant increases in debt and the ultimate crash.

The relationship between inequality and jobs is “bi-directional” where changes in one influence the other and likely create a reinforcing feedback.  Wages cannot be so unequal that lower income workers have to borrow to get by — when households reach their borrowing maximum, recessions happen (part of Fazzari’s point).  We need a job creation system to get people back to work as well as an inequality strategy that helps workers benefit from economic growth.

Getting people back to work isn’t enough, nor is simply solving inequality.  Jobs and inequality are hand in glove.  The goal, as daunting as it may sound, is to “grow the pie” to solve unemployment and inequality, not just “re-slice the pie” (borrow the analogy from Chris Benner and Manuel Pastor’s Just Growth).

Major League Winners and Major League Losers

With several sports leagues in full swing or in the playoffs, this seems like a good time of year to highlight recent work on using sports as an economic development tool.  Mark Rosentraub wrote both Major League Losers in 1999 which highlighted failed sports-based economic development.  He followed the work up in 2009 with Major League Winners, which found that with careful planning and execution, sports-based economic development had worked in some more recent cases.

For another view, Public Dollars, Private Stadiums by Kevin Delaney and Rick Eckstein provides an account of the process through which sports teams received public subsidies.

Finally, Sports, Jobs, and Taxes edited by Roger Noll and Andrew Zimbalist is a collection of essays that explore the economics and economic development potential of sports and stadia.

Tech Companies are Bad Urbanists, Can Learn more from Planning!

Allison Arieff, an editor of SPUR in San Francisco, writes about the challenges of tech companies’ increasing interest in city locations.  Looking particularly at the San Francisco Bay Area, she discusses how many tech companies are locating in cities, but as far too insular of entities.  Many, including Twitter, aren’t promoting street traffic because they offer so many urban amenities and shops inside their buildings while restricting access to only employees.

She sees the same phenomenon in suburban tech companies too.  Facebook has created a small faux urban area in Menlo Park with cafes, dry cleaners, and doctors offices in a sea of parking.  The area is only open to Facebook employees.

Smaller companies and start ups are being a bit more deliberate (partly out of necessity) to locate in areas that are part of neighborhoods and don’t disrupt the urban fabric.  Arieff notes the 5M Project as a good example of an integrated tech-neighborhood mixed use development.

Counterpoint to Friedman’s Assessment of PISA

Thomas Friedman, in the New York Times, has noted that the United States continues to trail other countries on the PISA assessment of student learning in primary and secondary school.

One important note on the PISA tests, and other international benchmarks of student learning, is that the United States has  never led the globe in student achievement — it has always been about where it is today, sitting around 15th place internationally, yet we have the largest GDP and most productive workforce. This suggests that educational achievement is the only factor in productivity and employment.  As Friedman notes, this is partly due to the fact that we once had an economy rich in manufacturing — which required less skill in the workforce. Some believe the preference toward education and skill is overstated though.   Harry Holzer and labor economists have shown that there is still, and will continue to be, a significant middle skill job sector in America.  What they find is that these middle jobs will require some postsecondary training — in programs that may only be a few weeks or months at venues like community colleges.

Most American workers (about 70 percent currently) do not work in jobs that require a college degree (nor does 70 percent of the population hold the degree).  Even as the country becomes more “high tech” and more “new economy” only 40 percent of workers (in the highest of estimates) will need a college degree.  The major gap in learning is for workers who will need “some” postsecondary training, but not a degree.  Our educational system doesn’t address the educational needs for future non-degree holding workers as well as it does for those continuing to a four year college.

Friedman is also correct that students who do best on PISA tests feel some ownership over their education.  America could build more student “ownership” over education by providing more than one track of learning.  This could happen by building out a significant career and technical training program in America’s schools.  The Harvard Graduate School of Education makes a similar argument in its important Pathways to Prosperity report.


Philadelphia Makes First Venture Capital Investment

The City of Philadelphia (through subsidiaries and the Philadelphia Industrial Development Corporation) has made its first equity investment in a company, reports the Philadelphia Inquirer.

The investment is for $200K in Real Food Works a firm that is a subscription food service that delivers healthy meals for people interested in dieting and eating healthy.  It seems to be kind of like a Netflix for healthy, real food.

The fund is called Startup PHL, and First Round Capital.  First Round is a venture capital firm that is managed by Josh Kopelman – a long time internet entrepreneur and investor – who manages investment decisions for Startup PHL.  This type of activity is great for cities and local businesses looking to grow.

I would love to see this type of investing backed by (or a small part of) city-based exchange traded-funds (as I have written about before).

Texas Technical Colleges to Receive State Funding Based on Students’ Post Enrollment Earnings Starting 2015

The Chronicle of Higher Education reports that starting in 2015, state technical colleges will receive funding based on the post enrollment wages that students earn.  (Link requires subscription – if you don’t have one, your library may have one!)  Traditional funding metrics like degrees granted, credit hours taught, and total enrollment will be out the window (just for these technical colleges).  Instead, funding will be given out based on how much students make afterwards.  Students who complete about three classes will be considered in the formula, not just degree earning students.  This model will ensure that short term certificate students are also considered.

Some are concerned about how state funding will account for other issues related to unemployment – particularly local structural unemployment or cyclical unemployment.  While valid concerns the leaders of the technical colleges sound up to the test saying, “[T]he major thrust of what we do is employability.  It doesn’t scare us.” (Michael Reeser, the system chancellor – reported by Eric Kelderman in the article linked above).

Earlier this summer, Oregon considered parallel plan, where university students would pay off tuition as a percentage of their income – no matter how high or low – for a number of years after graduation.  Under the Oregon proposal, a bachelor’s degree earner would pay about 3 percent for 20 years.

Kenneth Jackson on Historic Preservation and Skyscraper Development in Midtown Manhattan

Kenneth Jackson, an urban history professor at Columbia University, has written an op-ed on the current opposition to dense skyscraper development in Manhattan.

Jackson contends that without significant dense development, the city could follow the path of “second tier” cities.  Many current office buildings are aging and the city is challenged with being able to provide class-A office space for traditional financial and service firms that have driven the city’s economy.  Jackson notes that dense development and job opportunity draw young people to the city for chances at upward mobility and finding people to build families with.

He worries that the historic preservation movement in the city has extended beyond its original purpose to protect important, historically significant buildings to preserve any building that maintains the current streetscape.