Like many people, I’ve sadly lost much hope that Congress will ever pass any legislation that addresses issues that I care about—tackling inequality, supporting economic development, creating new job opportunities across America.  But, I’m going to try to overcome my reservations with a strong vote of confidence for the new Startup Act of 2017 (S. 1877).  This is a bipartisan bill introduced by Senators Moran (R-KS) and Warner (D-VA), along with Senators Blunt (R-MO) and Klobuchar (D-MN).

The Startup Act is a bit of a grab bag, and it’s unlikely that the bill can or will pass in its present form.   However, sections of the Act could be passed on their own or be included in other bills as they move through Congress. Thus, it’s important that economic development advocates voice their support for the bill and its key provisions.  These include:

• New visa programs to attract foreign entrepreneurs and high level graduate students seeking degrees in STEM-related fields.
• Additional funding for the Economic Development Administration’s Regional Innovation initiatives.
• Promotes accelerated commercialization of taxpayer funded research
• Creates new mechanism to assess the impact of new federal regulations on entrepreneurial companies.

The bill was introduced in late September and we’ll continue to provide updates on its progress in the 115^th Congress.

There has been a mega-dump of useful and interesting economic data resources over the past few weeks.  Here’s a few that are worth a look and a bookmark for future use:

• OECD’s 2017 Entrepreneurship At a Glance: This annual report from the Paris-based Organization for Economic Cooperation and Development offers a deep dive into what’s happening with start-ups and small businesses across the 35 OECD member economies.  This year’s edition includes new data on the gig economy and also takes a look at the state of women’s entrepreneurship as well.
• New CDFI Data:  The Urban Institute is involved in a major project assessing the impact of US Community Development Financial Institutions.   It has released a new fact sheet on CDFIs that has some interesting data.  The data show some impressive results and impact from CDFIs.  Overall, they show that CDFIs lent more than $34 billion between 2011 and 2015.  But, they also show that CDFIs remain limited in geographic scope as 27% of all US counties have seen zero CDFI activity during this time period.
• Distressed Communities Index: The Economic Innovation Group’s Distressed Communities Index is rightly getting a lot of media attention.  The most depressing headline?  52.3 million Americans—17% of our population—live in distressed communities.
• US Census Business Dynamics Statistics:  The US Census Bureau has just released the latest edition (2015 data) of its business dynamics statistics.   The latest figures are sobering.  There is a lot of good news, as the number of startups is rising and their job impacts are also growing.  But, the growth rates remain low and below historical averages.

Economists and academic researchers have long been consumed with the question: “Can entrepreneurship be taught?”  I’m not too concerned with this issue as I’ve seen numerous examples and programs that successfully to teach people of all ages and backgrounds on how to be successful entrepreneurs.  But, this sterile nature-nurture debate avoids a more important question:  what is the best way to teach entrepreneurship?  That is the focus of an interesting study in the new issue of Science.  The article reports on an extensive randomized controlled trial in Togo where large groups of business trainees (500 people in each group) were assigned to three different training approaches.  One group received no training before starting a business.  The other groups received a traditional business training program, where they learned about topics like business planning or marketing, or a curriculum that focused on personal initiative, goal setting, and persistence in the face of setbacks.   The results suggest that this latter focus on psychology and motivation trumps a focus on teaching business skills.   The group receiving psychology focused training started businesses that showed average annual profits of 30%, far exceeding the 11% found with firms started by other trainees.  The group enjoyed higher sales levels and were also more likely to introduce new products too.   This one study is not the last word, but it offer further evidence that successful entrepreneurship training builds new mindsets and perspectives as much as it imparts new skills.

Regular readers of this blog know that I’ve had the good fortune to spend a lot of my recent working time helping America’s coal-dependent regions identify new economic engines and wealth creators.   As these regions seek to diversify their economies, many are embracing their pasts as agriculture centers and are developing strong and resilient food systems based on locally grown products.   A recent Civil Eats article profiles some exciting new efforts in Delta County, CO (organic produce) and West Virginia’s Sprouting Farms training programs.

Exciting work is underway in coal regions around the US. In addition to promoting this recent article, let me add a few other relevant plugs.  First, check out Civil Eats, an excellent (and new to me) resource on food and food policy.  Second, the coal transition article rightly praises a new St. Louis Federal Reserve e-book, Harvesting Opportunity, that should be your current one-stop-shop for what’s happening in food systems development around the US.   Finally, if you’re interested in learning more on these topics and are based in Utah (or interested in visiting Utah), check out an upcoming event sponsored by the National Association of Counties and the National Association of Development Organizations: Strengthening Economies in Utah:  A Forum for Coal-Reliant Communities.  The forum will be held in Richfield, UT from Oct. 18-20.  Hope to see you there.

A number of recent media articles suggest that millennials are increasingly interested in relocating to the suburbs or to America’s smaller legacy cities.  If this is indeed true, it could be a very good thing as it will reduce the cost of living for millennials and build more prosperous legacy cities.  But, let’s not get too excited yet about the prospects for legacy cities.  A new Pennsylvania Economy League study, “Communities in Crisis,” takes a deep dive look at the economic health of that state’s legacy cities (i.e. places like Allentown, Reading, Scranton and York), and finds much cause for concern.   Like many larger older cities now in the news for the wrong reasons (e.g. Baltimore, Detroit, St. Louis), these communities face massive financial challenges.  The study assesses the fiscal health of more than 2,300 municipalities and finds that many places are in an insurmountable fiscal bind where tax burdens are growing while the local tax base shrinks.   Pennsylvania’s cities, towns, and townships are struggling to pay for basic services, especially police which is by far the number one cost burden for smaller places.

I plan to dig into this topic in greater detail, but at this point, one conclusion is clear.  We will need to rethink local government structures if we truly want to revitalize America’s legacy cities.  It won’t be enough to simply attract or grow more businesses.   No one, including millennials, will move to communities that struggle with basic services like fire, ambulance, police, and basic infrastructure support.  These basic services aren’t free—they’re paid for with tax revenues.  Current fiscal structures don’t work.   Reforming local government is a big lift, but a necessary part of real community revitalization.

I spent my lunch hour today at a fascinating Aspen Institute panel on Rural Grown, Locally Owned Manufacturing.  This was part of an excellent series sponsored by the Rural Development Innovation Group.   The panel included excellent fast growing rural firms: Microbiologics (St. Cloud, MN), Cascade Rescue Company (Sandpoint, ID), and Opportunity Threads (Valdese, NC).  The company owners shared some deep insights.  They face problems no different from their urban counterparts—finding talent is challenge No. 1 by far.  Yet, they all savored their work in rural towns where they felt part of a wider community and could actively participate in local decision making and community building.  They all also had a commitment to sharing the benefits of company growth with their employees and the community, in the form of employee ownership (in the case of Opportunity Threads) more general profit sharing, and their own local capital and real estate investments.

The event planners also shared an interesting new study of rural employment and poverty from the Carsey Institute.  There is a ton of useful data in this study that looks at rural counties across the US and ranks them by their family income levels.  The lowest performers tend to be located in the Deep South and Central Appalachia.  Meanwhile, the top performers are located in the upper Midwest and Mountain West (especially North Dakota, Wyoming and Colorado) and probably are affected by oil and gas activity. But, manufacturing mavens will also be interested in one final data point: in all rural counties (regardless of their income level), manufacturing is the second most important employer behind education services, health care and social services.   So, any efforts to reinvigorate rural America must have a heavy focus on manufacturing as well.

Program managers face some tough reporting challenges when it comes to entrepreneurship support programs.  These efforts take time to generate hard impacts.  Traditional job creation metrics help, but only over the long term.  Yet, funders and elected officials want job results right now and they aren’t willing to wait for better data.  We need to tell a different—and better—story.

Smart program managers need to think differently and develop more sophisticated and multi-faceted ways to track their program impacts.   This can often be easier said than done, but there are resources to help.   My good friend Cathy Renault of Innovation PolicyWorks has just produced an excellent guide to these issues:  “Metrics for Entrepreneurship Centers.”  While the guide is specifically targeted for business incubators and entrepreneurship centers, its tips and guidelines have much wider relevancy.   This is a good primer for anyone thinking about doing program evaluation right.  The report was developed in partnership with the International Business Innovation Association (InBIA) and a download is available for purchase ($25) at the InBIA bookstore.

Most entrepreneurial ventures create jobs one or two at a time, and in the business of economic development, that can be a marketing challenge–especially when communities all seek the home run wins of a big auto plant or other major employer bringing hundreds of jobs.  So, small business advocates need to be creative in making the case for why local entrepreneurs matter.

If you’re looking for good models, check out the new report from Kansas City’s KCSourceLink:  We Create Jobs.   This is an excellent model for making the case for small businesses as key drivers of regional economies.   It’s an easy read with compelling graphics, and it has a strong case to make.   According to the report, new small firms created more 16,000 jobs in the KC metro area in 2016.   If you’re looking to tell a better story about your local entrepreneurs, We Create Jobs is a good example of how to do it right.  (NOTE:  Full report access requires registration).

Big data is finally starting to hit the world of economic development, with new data sources and tools emerging on a regular basis.  That’s a great thing, but the big data revolution still tends to leave out smaller cities and rural communities.  Much of the new data is available for states and major metro areas, but if you dig down to small communities or even counties (as I regularly do), it’s much tougher to do a deep dive on economic trends and prospects.  That’s why the Atlanta Fed’s Small City Economic Dynamism Index is so useful.   The 2nd edition of the Index was just released and I encourage you to take a look.   The tool tracks 400 small cities and metro areas around the US, and provides data on 13 different measures of economic dynamism.   Issue areas include population migration, human and social capital, economic inequality, and business dynamism.  To learn more, visit the Index, check out this article, and also check out the Chicago Fed’s related Peer City Identification Tool.

NOTE  If you’re interested in learning more about benchmarking and data, especially for small communities, you may want to join a webinar that I’ll be presenting to the Pennsylvania Economic Development Association on September 13, 2017.  You can learn more and sign up here.

Over the past few years, there’s been something of a research backlash against occupational licenses, such as those earned by people working in hair or nail salons, plumbers, dental assistants and the like.  Critics contend that occupational licenses create barriers to entry, and make it harder for low income people and younger workers to enter these professional fields.   Armed with this data, the Trump Administration is gearing up to reform how states manage occupational licensing.  Somewhat surprisingly, this effort is quite similar to strategies proposed under the Obama Administration back in 2015.  However, a recent research paper suggests some caution in this area as it finds that occupational licensing may reduce income gaps and boost the incomes of lower income and minority workers.  Licenses help (or hurt) because they serve as market signals, providing evidence of key skills and knowledge.  This signaling may be especially important for low skill or low income workers, who often lack other credentials or means to signal work readiness.

This debate is important beyond the halls of academia.  Occupational licensing is big business, as ¼ of all US jobs require some kind of occupational license.   Licensing and credentials have also become a core activity of our workforce development system.  Indeed, they are one of the best means to help people build skills and enter onto promising career pathways.  While we can all cite silly licensing efforts, we must also recognize that these licenses and credentials help people enter and prosper in the workforce.  Given the mixed level of evidence in the field, we should be very cautious as reform efforts move ahead.