Our current economic recovery seems to be for real, but, for many African American entrepreneurs, the road back will be long and difficult.  An excellent–and depressing–series in the latest (March 23-29,2012) issue of Washington Business Journal (WBJ) examines how African American entrepreneurs have fared during and since the Great Recession.  You can access the series here (Note:  Some of the content is for subscribers only).

WBJ reporters took a deep dive into data on Small Business Administration (SBA) lending to African American businesses in the Washington DC metro area and the stats make for depressing reading.  Some samples:

• 44% of loans made to black-owned businesses between 2003 and 2008 have defaulted.
• Current lending levels to black-owned businesses have plummeted.  The number of loans made in in FY2011 was 87% down from 2007.
• Meanwhile, the value of these loans was down 71%.

The research found that a smaller slice of SBA dollars are now going to black-owned firms in the DC metro ara.  In 2007, these firms received 21.1% of local SBA loan dollars. Today, that share has dropped to 6.3 percent.   Lending to all other ethnic groups is on the  rise, while lending to black-owned businesses remains stagnant.

The series looks at a number of proposals for addressing these challenges, but, regardless of how policy makers respond, observers agree that the pathways back to prosperity will be long and hard.

For some time, EntreWorks Consulting has been part of a team (along with Camoin Associates and Scruggs & Associates) that produces an annual evaluation of the impact of Maine’s state-backed investments in research and development activity.   Maine has long been a leader in supporting rigorous program evaluation, and even in today’s tough budget environment, they continue to support these efforts as a means to assess whether Mainers are obtaining a favorable return on investment for backing key technology sectors and activities.  This year’s effort includes three studies:  the Maine Science and Technology Index, an evaluation of state R&D programs, and a case study analysis that focuses on the importance of middle skills jobs to Maine’s technology economy.  The reports can all be accessed here.

While the US Senate continues to dawdle on passing the JOBS Act, and its important provisions to promote crowdfunding, the British government is getting serious about how to create and support new forms of alternative business finance.  The latest salvo can be found in the Breedon Report, a study by an independent commission created to support Britain’s Department for Business Innovation and Skills.

As in the US, bank lending is by far the most widely used source of business finance in the UK.  Similarly, British entrepreneurs face great challenges in working with banks and accessing government lending programs.  Moreover, there is a huge pent-up demand for other financing tools.

The report, Boosting Finance Options for Business, contains a host of detailed recommendations for addressing these challenges.  These include, among others:

• Creating a single agency to aggregate public small business lending efforts
• Creating a privately-backed agency to aggregate and securitize small business loans
• Partnering with private sector associations to create new supply chain financing models
• Develop tools to facilitate public investment and support of online receivables exchanges, crowdfunding sites, and mezzanine loan funds.

The Breedon Report is expected to serve as a blueprint for the Cameron government’s future work in this area.  Let’s also hope some of these ideas and strategies make their way across the Atlantic,too.

If you’re in the Washington DC area next Monday (March 19), you should come over to the International Economic Development Council’s (IEDC) Federal Forum in Alexandria, VA.   On Monday afternoon, I’ll be chairing a panel on the topic of “Growing Regional Economies through University Partnerships.”  I’ll be joined by Virginia Tech’s John Provo and Diane Palmintera of Innovation Associates.

My comments will be focused on what I see as an issue deserving much more attention.  How can communities better partner with local community colleges and smaller colleges?  Most of the national discussion focuses on the important role of large researach universities, but most places aren’t home to a Stanford, MIT, or large land-grant univerisites.  Yet, they do host great colleges who may not do much scientific research but are important community anchors.

What can be done to better engage these schools in the process of community building?  A huge menu of options is available.  I’m going to talk about several projects that EntreWorks Consulting is currently supporting–these include:

• The National Association of Community College Entrepreneurship’s President’s Commitments, an effort to engage community college presidents across the US in supporting local entrepreneurial development.
• Several efforts sponsored by Virginia’s Region 2000 Partnership,  including the Center for Advanced Engineering and Research and a new 6 college regional consortium focused on entrepreneurship training and related activities.

In some ways, I had hoped this panel was postponed a few weeks as I am looking forward to a late March trip to Kentucky’s Berea College, which is a global leader in effective community engagement and stewardship.  Watch this space for a report on happenings at Berea soon.  In the meantime, hope to see you in Alexandria on March 19!

Budget wonks here in DC have been intrigued by a provision in President Obama’s proposed FY2013 budget that appears to fence off $1 billion in funding for manufacturing innovation.   This is wonderful news for manufacturing advocates.  It is also a sign that the White House is serious about fixing manufacturing—and doing something beyond creating yet another “manufacturing czar.”

While the placeholder is interesting, the details of this effort have not yet been officially unveiled.  However, some hints appear to be leaking out.  Accoriding to a recent report in Manufacturing News, the funds will be used in a new National Manufacturing Innovation Network.  This effort is modeled on Germany’s Fraunhofer system which has been hugely successful in seeding the development and growth of the powerful German manufacturing sector.  (You can learn more about Fraunhofer in this excellent report from the Information Technology and Innovation Foundation).  Think of this as a public-private partnership on steroids.  The funds will also be used to help the Pentagon take steps to preserve key parts of the defense industrial base that may be hurt via projected defense budget cutbacks.

While the devil is still in the details, this effort is both exciting and promising.  A formal unveiling of the proposal is reported to be coming very soon.

Today is the first day where the payroll tax exemption extension, enacted into law last month, officially goes into effect.  As is often the case in these high profile White House-Congress legislative battles, a number of other provisions got tacked onto the final payroll extension package.   The mix of other provisions includes, among other things, a requirement for formal Presidential certification before going ahead with the Keystone XL Pipeline and a welcome extension of more favorable expensing and depreciation rules for new propety and capital investments.  You can access the new law here.

Another welcome provision in the law (Section 2124) concerns the US Department of Labor’s Self-Employment Assistance (SEA) programs.  The SEA program allows states to continue providing benefits to the unemployed while they are starting a business.  In most cases, unemployment rules bar this move and require recipients to instead search for full-time employment.  The SEA program is currently voluntary and requires states to formally apply to participate.  At present, only Delaware, Maine, New Jersey, New York, Pennsylvania,  Oregon, and Washington have SEA programs.

The new law, based on legislation originally proposed by Sens. Wyden (D-OR), Carper (D-DE), and Casey (D-PA)  makes it easier for states to create SEA programs.  Under the new rules, state SEA programs simply require a signed agreement between a state Governor and the US DOL.  In addiiton, the law provides $35 million to assist new states seeking to create SEA programs.

Starting a new business is not for everyone, and may be especially difficult for many unemployed people.  But that doesn’t mean that they shouldn’t have the option if they have the desire and capacity to be an entrepreneur.  This important rule change will provide an opportunity for potential business owners across the US who want to leave unemployment by making a job as opposed to taking a job.

My good friends and colleagues at the Consortium for Entrepreneurship Education have released an interesting new report that assesses the state of entrepreneurship education here in the US.  The report summarizes surveys and interviews with state directors of Career and Technical Education programs, who were asked for their assessments of where entrepreneurship fit in their state’s formal education and training curricula.

Nearly all of the respondents agreed that entrepreneurship education was of growing importance, but their responses also indicated that the infrastructure to support entrepreneurship education remains quite weak.  For example, 80% of respondents noted that they had no teacher training or certification programs related to entrepreneurship education.   When asked how entrepreneurship was taught, the top response was via writing a business plan. The use of expereiential learning, entrepreneurship experiences, or other approaches, were rarely cited.  If youth entrepreneurship training is going to be confined to “how to write a business plan,” we can expect two outcomes:  1) Lots of bored students, and 2) Lots of poorly prepared entrepreneurs.   While a business plan can be helpful, it is not the silver bullet for creating a successful venture.

This study suggests that educators are beginning to “talk the talk” about entrepreneurship.  Now it’s time to “walk the walk” and build capacity to actually provide the training and tools that students want and need.

An interesting new research summary from the National Bureau of Economic Research assesses our current state of knowledge on the connections between offshoring, international trade, and the deteriorating job conditions faced by many American workers.  The researchers, Ann Harrison and Margaret McMillan, summarize a host of studies that examine these connections. They find that, to date, researchers often present contradictory findings—with some asserting that offshorring leads to job loss, while others contend that the offshoring of low-wage and low skill jobs actually improves both job quality and quantity here at home.

Digging deeper, Harrison and McMillan depict a more nuanced reality. In general, offshoring costs jobs here at home.  But, if American workers and foreign labor work on different tasks, expanded domestic and multinational employment can go hand in hand.

But the picture still remains complicated and the general news is not good.  Offshoring puts great pressure on domestic wage rates and the downward spiral grew worse in the 1990s in comparison to previous decades.  Moreover, the researchers find that, when displaced workers obtain new positions in the manufacturing sector, their wages don’t change greatly.  However, if they move into new service sector occupations, wage declines are significant.  And, given the continued erosion of manufacturing jobs, most displaced workers follow this latter path toward service sector jobs.

So what does this all mean to the displaced American worker?   The best strategy is to find new employment in high paying manufacturing industries.   The second best strategy is to find a service sector job that pays comparable wages to the manufacturing sectors—not an easy task in today’s economy!    The authors note that this transition is not going to occur through the magic of the market.    They suggest that some kinds of “soft” industrial policies, such as investment in infrastructure or a strengthened education system, are needed.   In my mind, these suggestions represent a minimalist strategy.  We need even more aggressive and creative tools to help workers effectively respond to the new globalized labor marketplace.

If you’re a government program manager, it’s not likely that you’re looking forward to a new Government Accountability Office (GAO) on your work. It’s kind of like hearing that 60 Minutes wants to talk to you.  So, I’m sure that various workforce development programs across the US were a little worried about the findings of a new GAO study on the Workforce Investment Act (WIA) that was  just released today.

The report examines collaborations between employers and local workforce investment boards (WIBs) with a particular focus on 14 local programs that are especially innovative or promising.  What did GAO find?   Employers like the programs, partners are well-engaged, and, most importantly, local residents are gaining important job and career skills!!!  For those working in the field, this should come as no surprise. But, it’s nice to see a regular critic like GAO recognize the benefits of these investments.

The GAO did also highlight some challenge areas.  For example, collaborations are difficult to manage and current rules and regulations are too burdensome and complex.   Most of the indentified problems are fixable, but only if current WIA rules and regulations are updated and streamlined.  If not, WIBs must continue to operate via outmoded and antiquate rules and procedures.  Hopefully, Congress will listen as they consider new funding and reauthorization of WIA this year.  The time for change is now!

My good friend, Stu Rosenfeld, has a nice essay in the latest edition of the Daily Yonder blog.  For the last few years, Stu and his colleagues have produced a host of excellent studies highlighting the role of arts and culture in building more prosperous rural regions.   His latest essay highlights their recent work in Mississippi which is home to a sizable creative economy.  In fact, they estimate that more than 63,000 people are employed in the state’s creative economy.

The creative economy is not just about arts–it includes a diverse set of industries.  These include sectors that use design skills and technologies. including architecture, interior design, and various media.   As we noted in a previous post, the Mississippi Economic Council now recognizes the economic development importance of this sector; supporting the Creative Economy is one of its current top priorities.   We hope that other states and regions will recognize that creative enterprises are not just local amenities, but can be important economic engines of their own.