Last week, a new OECD report on US policy for dislocated workers prompted my blog post on current US policies, which, to put it bluntly, don’t work very well. The US has a unique and unenviable position: our workforce faces some of the highest levels of economic dislocation, yet we provide some of the worst services and support in terms of helping workers respond, retrain, and recover. The OECD’s research on our weak performance has recently been supplemented by a deep dive into a strong performer: Denmark. Back to Work: Denmark assesses how the Danes do worker retraining right. Their renowned system, known as “flexicurity,” maintains open and flexible labor markets but also invests substantial resources to help workers retrain and reskill. About 75% of displaced Danish workers are reemployed within one year, and workers can choose from a wide variety of training options. At the same time, they face relatively strict rules that require active job search and training as opposed to remaining on the dole. (In fact, OECD researchers view Denmark’s system as much tougher than that in the US). This entire system applies to all members of the workforce—not just those who are displaced due to economic conditions or other outside factors.
I’ve spent much time in Denmark and I know that its unique characteristics (e.g., a relatively homogenous population and robust public sector) can limit the applicability of Danish models to US experience. Yet, parts of this flexicurity model could be (and should be) embraced in the US. These include better early warning systems to be aware of potential job loss or firm closings, new employment approaches like job sharing and job rotations that can help reduce full-time job loss, and robust investments in training, apprenticeships, and job-to-job transition assistance.
This kind of effective system isn’t cheap. The Danes spend about 1.8% of GDP on labor market programs and employment supports; the US spends about 0.1% of GDP on these functions. Approaching investments levels found in Scandinavia is unlikely, but US investment is still abnormally low. Currently, the average level of labor market program investment in OECD countries is more than twice that found in the US. One thing is clear: we’re getting what we pay for. Our system doesn’t work and it does little to help workers with safety net or retraining services. The result is more inequity and more workers at risk and in need.
Retraining displaced workers might be the thorniest challenge in economic development today. This is especially true when we’re talking about long-tenured workers in manufacturing, extraction and other industries. Nearly every day, we read about the plight of workers at plants like Indiana’s Carrier facility, in coal mines, in paper mills, and so on. A few figures tell the depressing story. Over the past two decades, about 3.2% of American workers are displaced every year (i.e. they lose jobs due to outside economic factors as opposed to poor performance). And, of this group, only half are re-employed within one year. (Note that these figures cover all workers in all industries; they also undercount displacement levels in downturns like the Great Recession. The displacement figures are higher for older workers and in industries like manufacturing, and conversely, the reemployment numbers are worse.) Moreover, the reemployed typically make less money than before, and have more tenuous employment situations, with a higher concentration of part-time or temporary work. So, we have a large base of workers pushed out of jobs through fault of their own, and with limited prospects of finding good new jobs at equal or better pay.
This depressing situation requires a rethink of how we do worker retraining and support. I’ve written about this a lot in the past, including this piece on re-employing coal miners. If you’re looking for an excellent guide to the challenges and potential solutions to the worker displacement challenge, I can highly recommend a new report from the Organization for Economic Cooperation and Development. Back to Work: United States offers a comprehensive look at what’s happening here in the US related to worker displacement and retraining. It’s a sobering look at the challenges, but it also reviews some new policy ideas and also digs deeper into some promising programs in Pennsylvania, Michigan and elsewhere. But, the bottom line remains challenging. When compared to other OECD nations, the US faces a larger job displacement challenge, yet it provides much more limited support and investment to assist these displaced workers. Jawboning employers like Carrier might help on the margins, but a more sustained set of policy solutions is needed.
Tonight, I’ll be attending a first birthday celebration for WERA-FM 96.7, Arlington County Virginia’s thriving new community radio station. When the station first aired last year, WERA could count on a few ready programs and a large base of enthusiastic volunteers. One year later, it broadcasts a full slate of programs with a larger and even more enthusiastic volunteer base. WERA is now home to lots of unique and interesting programming that you can’t hear elsewhere. This includes lots of alternative music, with shows devoted to reggae, show tunes, bluegrass, EDM, jazz, and the like. Talk shows also cover the gamut from barbecue to careers to the immigrant experience to awesome entrepreneurs to soccer to tips on how to live “green and sexy.” If you’re in the Washington DC metro area, you can listen at 96.7 FM. WERA also streams at www.wera.fm and you can access an archive of shows at http://wera.fm/programming/current-programs.
WERA is part of a recent uptick in community radio stations, thanks to recent FCC decisions to open up more licenses for this use. WERA is not alone in the DC area either—another low-power FM station also operates in Takoma Park (DC/MD). In Arlington, the community radio experiment has been hugely successful and I look forward to future birthday celebrations. Happy 1st Birthday WERA!
Last month, I spoke at the Fall Gala of the Roanoke-Blacksburg (VA) Technology Council (RBTC). I was asked to join the RBTC thanks to some past EntreWorks Consulting work on an effort that ultimately became the Roanoke-Blacksburg Innovation Blueprint, a regional road map for the innovation economy. This effort has been a huge success, generating lots of accolades for the region and its industry leadership. My remarks focused on where to go next, and I focused a great deal on how to create a more equitable innovation economy that engages all residents in the region–not just the techies. An op-ed version of my remarks recently appeared in The Roanoke Times, and I’m hopeful that I can soon return to see more great things happening in the area.
The election season’s media hype around the so-called “War on Coal” has meant less coverage on the state of the shale gas industry. A few years ago, shale gas was viewed by many as an economic savior for many rural regions, but the subsequent oil and gas bust also burst many of these hopes and dreams. However, there are many signs that the oil and gas sectors are on the verge of sputtering back to life. (Here are some recent industry assessments from the Wall Street Journal and the Economist.) As an economic developer, I’m especially focused on how the shale gas boom and bust and potential resurgence will affect nearby communities. If you’re interested in getting an update on this issue, let me refer you to the Pittsburgh Post-Gazette’s excellent PowerSource energy new site. In the past week, the site has published three excellent stories on how the shale gas boom and bust has affected the tri-state region around Pittsburgh. These include stories on post-boom life in Tioga County (PA), the fate of workers who retrained for jobs in the shale gas industry, and the expected impacts of a new ethane cracker plant now under construction in Beaver County (PA). This multi-billion dollar project from Royal Dutch Shell is one of the largest capital investments ever made in the region. While the industry’s prospects are looking up, the general conclusion from these recent reports is more sobering. Expect some new jobs and economic growth, but don’t expect a miracle. The industry’s boom and bust cycles are likely to be the “new normal” for many shale gas communities.
I recently had the pleasure of sampling brews at Stone Brewing, one of the new breweries and distilleries anchoring Richmond Virginia’s thriving foodie scene. Richmond is not alone in its efforts to spur development by attracting breweries, distilleries, artisan crafts people, maker spaces and the like. These places all define cool and hip nowadays, but we often forget one other thing they share in common: they are all manufacturers! Much like their bigger brethren at Ford, Newport News Shipbuilding or Smith Tool and Die, these businesses face a number of business challenges and have distinctive needs in terms of real estate, workforce development, and the like. Many regions are trying to attract or support these new small manufacturers, but many don’t know how to do it right. If you’re in this situation, you might consider applying for Smart Growth America’s new project to provide technical assistance for communities seeking to support small manufacturers as part of a wider community revitalization initiative. The project team is now accepting applications with a final deadline of January 6, 2017. You can learn more and obtain application materials here. This is a great—and free—opportunity to learn from leaders in the field.
Regardless of your political leanings, it’s been a rough election campaign that has raised a lot of questions about what American stands for and where we’re going. If you want to get some level of inspiration and a reminder of a few things that made America great, let me offer a plug for the Smithsonian’s new National Museum of Industrial History in Bethlehem, PA. I’m a history geek, I work in economic development, and I’m from Pennsylvania, so this museum was always going to be a winner for me. But, non-history geeks should like it too. It is a beautiful restored facility located on the former Bethlehem Steel facility and it includes a great array of impressive machines that fueled the Industrial Revolution. (For you gamblers, it’s located one block away from the Sands Casino, also in the same complex). The museum opened in August and is just starting to get some well-deserved attention. (Here’s a useful article from Keystone Edge.) If you’re ever visiting or driving through the Lehigh Valley or Eastern Pennsylvania more generally, this museum is worth a visit.
It’s the start of Global Entrepreneurship Week so many organizations use this opportunity to release new reports on the entrepreneurial economy. The 2017 Global Entrepreneurship Index (from the Global Entrepreneurship and Development Institute or GEDI) is one of the big ones and it was released this morning. This comprehensive study assesses entrepreneurial ecosystems in 137 countries, assessing 14 different factors ranging from economic freedom to urbanization levels to digital governance practices. The big headline for GEI 2016 is that the US tops the rankings for the second year in a row. Other top performers (in rank order) include: Switzerland, Canada, Sweden and Denmark. Other report highlights include India’s strong performance, showing the biggest jump in the rankings this year. The site also includes a useful tool where you can view and download data for every country. NOTE: Registration is required for accessing the full report.
The clocks are getting set to change and the election season is (thankfully) coming to an end next week. That means it’s also time to get ready for Global Entrepreneurship Week, which will be recognized around the globe during the week of November 14-20, 2016. I’ve been tangentially involved with GEW from the start, and I’ve been amazed at the achievements of the GEW team. This effort began with a few programs and countries in the mix. Now, it engages 160 countries and 20,000 partners who support 35,000 events that engage as many as 10 million people. That’s pretty darned impressive. It’s not too late to get involved. If you are an entrepreneur or work with entrepreneurs, sign up, sponsor an event, and help spread the word! You can find out more at the GEW global site or at the GEW USA site.
The rise of economic development philanthropy is one of the more exciting and promising trends in community development today. More regions around the US are tapping into local foundation dollars to help finance critical economic development activities and projects. Community foundations have been around for a long time, but, until quite recently, they weren’t investing much in economic development. They were investing in good causes, such as local scholarships, but they weren’t seeking to make catalytic investments to help transform local economies. They’re now moving in this direction, and not a moment too soon as other sources of public financing are drying up. My colleagues as the Center for Rural Entrepreneurship and the Aspen Institute’s Community Strategies Group have been working this issue for many years, and you can find useful resources via both groups. They have recently collaborated on an excellent article in the latest issue of The Foundation Review. The entire issue, focused on the future of community, is worth a read, but I’ll especially recommend “A New Domain for Place-Rooted Foundations: Economic Development Philanthropy.” In addition to offering an introduction to the field, it offers loads of real-life examples of economic development philanthropy in practice from across the US.