A new assessment of the US’s independent workforce–The State of Independence in America 2017 from MBO Partners–was released this week.  This is a very useful annual survey that is worth a look–however, I always recommend some caution when the actual core data is not shared with the public for further review and assessment.  With that proviso in mind, the 2017 survey does include some interesting findings.  The headline for me is that roughly 41 million Americans are now engaged in some kind of independent work.  That figure represents 31% of the US private sector workforce, and includes folks from every demographic, income, and age category.   The study offers a useful take on various types of independent workers,and finds that the number of reluctant independents (i.e. those who would prefer regular full time work) is declining thanks to an improving economy.  This group now makes up about 24% of the independent workforce.    The rising tide is also lifting the status of some full time independent workers.  While the overall numbers of full time independent workers has dropped slightly, there was an uptick in the number of full time independents making more than $100,000 per year.  This group grew by 4.9% last year, and now includes more than 3.2 million people.  This MBO survey has been ongoing for several years now, and as  the data piles up, we are getting some very useful insights on trends in the independent workforce.  If you want to understand your local economy, you’ll need to understand this part of your workforce as well.

The data on the benefits of employee-owned companies is very compelling.  For example, a recent Rutgers University study found that employee-owned firms have higher productivity rates and generally outperform similar firms that are not employee-owned.  Moreover, employee-owned firms were less likely to shut down or lay off workers during the last two recessions.  Given these trends, it’s curious why employee ownership doesn’t get more attention in policy circles and among economic developers.  It’s also a challenge for these companies to raise money, as a new Fifty by Fifty/Democracy Collaborative report shows.    The study was written by Maryann Beyster, the daughter of J. Robert Beyster, the founder of SAIC, which was, at one time, America’s largest employee owned business.   The study reviews the current landscape of impact investing and suggests that these investors can and should be expanding investments in employee owned firms.  A few CDFIs and private investors target this market, but they are rare exceptions.   The benefits of aligning impact investing and employee ownership could be profound, bringing new resources to a neglected, but important, segment of American business and creating new opportunities for profitable investments in community development.

Thanks to the excellent website and newsfeed, The Daily Yonder, I recently got acquainted with an equally excellent research paper, “The Economic Status of Rural America in the Trump Era,” by Stephan Goetz, Mark Partridge and Heather Stephens.   There’s a lot of loose talk about the state of rural America in the aftermath of Trump’s election victory.   However, there’s not a lot of rigorous analysis of what’s happening with the rural economy and the key ingredients to rural prosperity.  After all, we wouldn’t see a horrific Trump Administration budget plan that guts rural and economic development programs if his team truly understood the current state of the rural economy.    This new research paper provides a deep dive into what’s happening in rural regions.   The general picture isn’t great.  Economic integration between urban and rural places is declining, and the urban-rural economic divide is growing.  However, at the same time, we are getting a better sense of  what works in rural economic development.  The paper includes a good review of policy options, and the basic message is  pretty clear:  Build from Within.   Effective policies will build on regional partnerships (similar to those underway via the Appalachian Regional Commission and the Delta Regional Authority), supports development of local entrepreneurs, and seeks to diversify local economies with a mix of agriculture and other sectors as well.

Starting next week, I’ve got several upcoming speaking engagements, including:

• May 10:  Southwest Virginia Economic Forum (Wise VA)
• June 15: NERETA Job Creation Summit (Scranton, PA)
• June 19-20:  Association of Defense Communities (Washington, DC)

I’ll confess to a little fatigue with various shorthand business pitches for companies such “Uber for XXX” or “Amazon for YY.”  (My personal favorite, “Fitbit for Cows,” is an actual business.  Cowlar is a successful company selling livestock sensors to the dairy industry.)  Thus, I was a bit skeptical hearing about The Food Corridor, aka AirBnB for commercial kitchen space.   However, this is a cool site and an excellent idea, too.   Underused kitchen space exists in every community—in churches, school, and other facilities.  Why not link budding food entrepreneurs to these spaces?   That’s the gist of the Food Kitchen, and it’s a great concept.  Food entrepreneurs sign up, and use the platform for access to kitchens, equipment, storage space, partners, and other needs.  The company started in Fort Collins, CO and is now expanding nationwide.   Check them out, and most importantly, tap into this great resource for your community!

In today’s America, if you want to be a freelancer or gig economy worker, you need to make a basic trade-off.  You get freedom, independence, and (hopefully) more money in exchange for zero benefits and lots of risk in terms of paying for health care and retirement.   Investing for retirement is particularly challenging, as daily pressures often trump far-sighted financial planning.  Moreover, affordable retirement savings options aren’t widely available. A new Small Business Majority poll took a look at these issues and asked free lancers about their retirement plans.  The poll surveyed freelancers from around the US, and found a paradox.  This surveyed group reported that they were thriving, with 53% reporting that they were “doing well.”  Meanwhile, 40% of respondents had no retirement plan at all.   Surveyed freelancers pointed to cash flow as a major impediment; they lacked needed savings to plow into IRAs and other existing retirement vehicles.  They expressed strong support for more flexible and portable retirement savings plans that allow for easier movement between freelancing and full-time employment, and which provide more automatic procedures for enrollment and investment.    These desires don’t seem like a big lift as such retirement plan features are already commonplace for full-time employees. It’s time to offer similar flexibility and savings options for the independent workforce.

When we think about America’s coal economy, we typically first think about Appalachia.  But, the reality is that most coal in the US comes from the West—from regions in Colorado, Montana, Utah, and Wyoming in particular.  Communities in the West are also facing challenges as the demand for coal slows, and they must seek out other economic engines to diversity their economies.  Last week, I was in Denver for a conference on “Strengthening Economies in the West” and I learned a great deal about what’s happening with coal –reliant communities in the Western US.   I plan to dig deeper on this topic in future blog, but, for now, let me share a few helpful resources that I learned about last week.

• The Changing Coal Industry:  This report for Montana’s Coal Country Coalition assesses the regional impact of Montana’s coal industry, and maps the potential effects of its decline.  It also offers a series of recommendations for how impact communities can respond and recover.
• ENDOW Wyoming:  Wyoming is also looking to develop new business opportunities via ENDOW (Economically Needed Diversity Options for Wyoming) Wyoming, a new initiative to encourage communities to develop strategies for economic diversification.   ENDOW seeks to link a host of initiatives such as programs to research new carbon capture technologies, a statewide outdoor recreation task force, and Wyoming Grown, an effort to bring Wyoming natives home to the state.
• IceLab:  In Gunnison CO, local leaders have embraced entrepreneurship via IceLab, a local accelerator and working space that seeks to become the hub for entrepreneurs and innovators in Western Colorado.

As budget cuts hit essential government programs for community development, we all need to be searching for other sources of investment capital to support local economic development and workforce initiatives.   Philanthropy must be a critical piece in this puzzle, but we all need to “up our game” if we want to make real impacts.  A new study from the National Center for Responsive Philanthropy describes the extent of the challenge in the South.  The research examines philanthropic grantmaking in the Alabama, Georgia, and Mississippi with a special focus on distressed regions of the Black Belt and the Mississippi Delta.  It finds that per capital investments in the region average around $221 per person while the US average is about $451 per person.   The average in the Black Belt and Delta regions is even lower:  $41 per person.  (In comparison, the New York City per person average is $1,966).

These investment gaps mean that challenged regions start from behind, and often lack the capacity to “catch up” by making new investments to build communities and development local talent.   New efforts to spur community development philanthropy are needed—especially in rural America.  There are lots of good efforts underway and I encourage you to check out some of the following:

• National Center for Responsive Philanthropy:  National effort to spur investment in underutilized regions and programs
• Appalachian Funders Network:  Focused on collaborations to invest in Central Appalachia.
• Rural Development Philanthropy Learning Network:  A new Aspen Institute-backed learning network working with community foundations from across the US.

A recent Brookings piece on the use of social impact bonds in Colombia prompted me on a little research project to examine what’s been happening in this space since I wrote about it a few years ago.  The Colombia project, which supports skills training for at-risk populations, is itself is a big deal.  It’s the first time that a social impact bond (SIB) has been used in a developing economy to support a development project.   Otherwise, the SIB field appears to be chugging along.   It’s not living up to all the early hype, but it is becoming professionalized as practitioners get a better sense of the types of projects and interventions that can best be supported via SIB funding.  Early childhood development is one promising area.   Generally, in the US, we still have somewhat limited experience with SIBs.  But, many observers, including me, remain hopeful that they can become part of the funding mix for education and training programs.   I continue to believe that SIBs hold great promise as a funding tool for workforce development (see this useful review from the Atlanta Fed) at a time when direct federal dollars are sure to be drying up.   On another front, there is legislation in Congress to help promote use of SIBs.  The Social Impact Partnerships to Pay for Results Act (HR 576) has been introduced by bi-partisan group of House members, led by Reps. Pat Tiberi (R-OH) and John Delaney (D-MD).   Interest in new financing tools appears to be growing.

As regular readers of this blog know, I can get going on a good rant over the near absence of any kind of economic transition support for displaced workers in the US.  Our social safety net is torn and frayed, and millions of people are falling through the net.  Some recent research shows that this is not just an issue of minor policy tinkering.  Our limited and underfunded transition efforts have real consequences for real people, according to new research from Anne Case and Angus Deaton of Princeton University.  Their study, Mortality and Morbidity in the 21^st Century, has garnered a load of media attention for its focus on increasing midlife mortality among the US working class.  But, the study also shows another set of scary trends.  When faced with an economic shock, such as a plant closure or a larger event like the Great Recession, American workers are more likely to suffer from continued health problems and higher death rates than their counterparts in other countries.   When workers in Europe or Australia lose jobs, they also suffer.  But, they also seem to recover over time.  In the US, recovery is much slower and sporadic.  Lots of factors appear to be at work here, but it’s clear that a weak social safety net plays a central role.  When work disappears, American workers have fewer options for health care, social support, or retraining.    Without resources or support, the rise of “deaths of despair” should come as no surprise.  But, it should be a surprise—and a disgrace—that we aren’t doing anything about it.