I spent this morning over at the Aspen Institute for a great panel on Rural Development Hubs. Rural development hubs are a new concept meant to describe new types of organizations and networks focused on rural community building in a holistic way that embraces traditional economic development, local institution building, and a focus on enhancing all forms of local wealth (cultural, social, natural, etc.). The panel included excellent organizations from Arkansas, California, New Hampshire, and Wisconsin, presenting some inspiring stories and some real-life perspectives on the difficulties—and the critical importance—of embracing new approaches to community building in rural America. The event also coincided with release of an excellent issue brief on Rural Development Hubs. This brief offers a lot of good ideas and an excellent introduction to this work—it should be followed later this year by a deeper dive into the rural development hub concept. Look for this work in Summer 2019.
Last week, I was in Denver for an important and interesting meeting of eleven coal-impacted communities from around the Mountain West. The community teams were meeting to develop work plans and to share ideas on how to create new economic opportunities while also responding to job losses in coal-related industries. On Friday, Route 50 published an excellent summary of the session, and our larger project, that is well worth reading. Give it a look—you’ll be inspired by these communities and you’ll also learn some good ideas about economic diversification and smart community planning as well.
For much of 2018, we spent a good amount of time in Indiana working on an entrepreneurial assessment of the agbiosciences sector. We learned a ton, but were also very impressed with what’s happening with agbio in Indiana. Last week, AgriNovus Indiana released its report, The Entrepreneurial Ecosystem for the Agbiosciences in Indiana. The report takes a comprehensive look at the resources and assets available for Hoosier entrepreneurs working in exciting new fields like precision agriculture, new forms of plant science, and new food technologies. The bottom line is that Indiana is well-positioned to be a global leader in this space, thanks to an entrepreneur-friendly business environment, support organizations like AgriNovus, and key anchor institutions, including Purdue University and leading corporate players such as Corteva Agriscience, Elanco, and others.
The gig economy (or the 1099 Economy) has been with us and in full swing for nearly a decade now, and these new ways of working really aren’t that new any longer. Yet, governments around the world are still struggling with how to regulate, manage, and support these new directions. How can the safety net for freelancers be improved? How can governments effectively tax and regulate these new business forms and new structures, such as gig economy platforms (e.g. Uber, Task Rabbit)? How can we ensure long-term success and security for independent workers in areas like professional development, pensions, and the like?
All of these questions are still being debated and new ideas and solutions are being developed around the world. To get a sense of the current state of play, the Paris-based Organization Economic Cooperation and Development (OECD) has just published an excellent compendium: Policy Responses to New Forms of Work. The report presents a comprehensive look at the state of policy making related to the gig economy. It reports on a survey of 44 Ministries of Labor around the world, along with an extensive review of recent research. While the surveyed economies are quite diverse, the study finds many common concerns among policymakers. These include building strong safety nets for freelancers, developing better data to understand the gig economy, and finding new tools and methods to provide training and other support services to these workers.
I’m not sure that access to capital is the number one problem facing small business today, but it clearly serves as one factor that contributes to lower business start-up rates, more business failures, and slower small business. That’s why I’m pleased to see that Third Way, a newish DC-based think tank, is pitching a big idea that they are calling the Opportunity Bank. The Opportunity Bank is a proposed trillion dollar funding pool (over ten years) that would update and supercharge the US Small Business Administration’s (SBA) 7a loan program, which currently serves as one of the largest sources of debt capital for small business. The 7a loan program is popular, but it falls far short of meeting current needs. The Third Way report hits this issue hard, noting recent Fed research showing that many firms fail to even pursue loans due to bureaucratic burdens and fear of rejection. The Opportunity Bank would increase lending via more funds for lending, reduced administrative fees, and other tweaks to increase both interest in and use of these loan programs. This is an interesting concept and a hopeful sign that new ideas for supporting small business may get a hearing in DC and beyond.
Since it first launched in 2002, I’ve been a member and close partner of the National Association for Community College Entrepreneurship (NACCE). That’s why I’m so excited to see that the current NACCE leadership has put out an excellent book, Community Colleges as Incubators of Innovation, which distills lessons from NACCE’s 15 years of work to encourage community colleges to take a leading role in training students and assisting communities to start and grow new businesses. This excellent edited volume is full of insights that are relevant not only to community college staff and partners, but to community and economic development leaders as well. Chapters cover topics such as how to build and support regional ecosystems, working in rural regions, linking entrepreneurship and workforce programs, and how to teach and instill an entrepreneurial mindset in students. Like community colleges, the book offers a great fusion of academic and real-life wisdom, mixing new ideas and approaches with focused case studies on what really works in both colleges and communities.
Much of the most important work we do in economic development is about what government agencies call economic adjustment, i.e. helping workers, businesses, and communities affected by an economic shock, such as a plant closing or a wider economic downturn. In the US, we pay lip service to supporting economic adjustment, but we don’t really deploy real money to support this important mission. That’s my take-away from a new Government Accountability Office (GAO) inventory of Federal economic adjustment assistance programs. This inventory is the first piece of a larger analysis of these programs requested by Senators Coons (D-DE) and Moore Capito (R-WV). GAO researchers are always impartial and non-partisan, so the inventory offers a straight-up inventory with little editorial comment. It identifies 15 federal programs and one tax expenditure program that support economic adjustment. Examples include trade adjustment assistance for businesses and workers, the Pentagon’s Office of Economic Adjustment, and the POWER program focused on helping coal-impacted communities. These are all excellent programs, and I’ve consulted for many of them. This well-meaning and comprehensive inventory does not note (but I will) that these efforts are woefully underfunded. My calculations suggest that total federal spending on these programs (FY 2017) was about $1.78 billion, with more than half of the funds devoted to worker retraining at the Department of Labor (WIOA Dislocated Worker Block Grants to States). This may sound like a big number, but it is tiny in relation to the needs of laid-off workers, their families, and distressed communities. Recent research from the OECD and others suggests that the US needs to step up its game in terms of helping displaced workers deal with job loss, and gain new skills to re-enter the workforce. I hope this work from GAO can help stimulate more discussion on this important topic.
The latest edition of our e-newsletter EntreWorks Insights is now available. This issue looks at the growing challenge of rural housing, where housing shortages and affordability pressures are having profound negative impacts on economic mobility and local economic development. You can subscribe to future issues and see past issues here.
Whenever I’m losing faith in the American political system, I look to our British colleagues dealing with Brexit and think: “It could be worse.” The ongoing Brexit process is a colossal disaster with ripple effects across the British government and society. Our British economic and community development colleagues are in the midst of it too, as they struggle to create what they are calling the Shared Prosperity Fund (UKSPF). This fund is designed to replace the billions of regional development funds that were previously invested to support distressed regions across the UK. For some regions, such as Wales, the EU has provided a sizable level of investment.
The Shared Prosperity Fund was first proposed by the Conservative Government in 2017, with formal consultations and planning to be completed by late 2018. This work has not yet been completed, and the process has been described as “maddening” by some observers. Over the past year, there has been a lively debate on what the UKSPF should look like. Here are interesting takes from a special All-Parliamentary Group, the Institute for Economic Development, and other advocacy organizations like Locality, the Joseph Rowntree Foundation, and the Federation of Small Businesses.
I won’t summarize all the details here, but simply point out that Brexit is and will continue to have massive repercussions for how the UK supports economic development. While the high-level UK-EU negotiations continue, critically important policy decisions are also being made. It’s not just about how to replace the lost funds, but the debate also addresses key questions such as the role of local governments, the focus of new investments, and procedures for accessing and measuring the impact of UKSPF funds. The current overall uncertainty around Brexit suggests that the UK’s distressed regions will not fare better under the new rules and regimes.
I missed this report when it came out in November 2018, but I can highly recommend a new study from Bridgespan Group and the National 4-H Council entitled Social Mobility in Rural America: Insights from Communities whose Young People are Climbing the Income Ladder. The study builds on the well-known research of Harvard’s Raj Chetty and others that examines the sad state of economic mobility in the US. Their Opportunity Atlas maps how where we live determines our future economic mobility. The Bridgespan/4H study pivoted from this research and sought to examine what’s happening in rural regions that doing a good job of promoting economic mobility. This field report examines communities in Texas, Minnesota, North Dakota and Nebraska, seeking to understand how these regions help their young people move up the economic ladder.
The report offers some good questions that any community should ask of itself:
- Does our community expect all our young people to participate and stay engaged?
- What support systems are we providing to our youth, and which are most needed?
- Are we imbuing our young people with a sense of possibility and helping them plan accordingly toward a better life?
- Are we providing a wide array of opportunities for youth to build life skills?
- What actions are we taking to extend access to resources and opportunities to all our people, regardless of their income, race, religion, or location?
- What steps are we taking to build the “demand side” of the economic opportunity equation—are we making our community a place where young people want to remain or return to if they leave?
The report also offers hands-on guide to programs and initiatives to promote economic mobility. To summarize, successful communities have high expectation, strong support networks, and a conscious focus on providing good learning opportunities for youth. While the study’s focus is rural, this is good advice for any community.