New Data Tools and Resources You Should Use!

In my on-line travels over the past few weeks, I’ve come across several interesting sites and resources that are worth a look.  These tools and reports assess a number of emerging issues related to economic and community development.  Check these out when you can!

  • Following the Money:  The Atlanta Fed has been doing some excellent work in areas related to economic and workforce development in recent years, and I’ve plugged them on many occasions.  Now, they’ve created a nice data tool to look at how your region is doing in terms of attracting philanthropic dollars.   As foundations become more important players in community development, we need to understand where and how they invest.  This tool will help you get started in understanding what’s happening in your region.
  • Bon Appetit Appalachia:  As part of its current strategic plan, the Appalachian Regional Commission is making a big push to support local and regional food systems investments.  The Bon Appetit Appalachia site helps you find food and food systems resources across Appalachia.  If you’re a foodie, a beer nut, a wine snob, or you just like a local or state fair, this is a good site for you.
  • Virginia Incentives:   Work with the Pew Trusts and the Center for Regional Economic Competitiveness, I’ve been involved in some interesting work with many states to improve how they track and report their economic development incentives.  This work has generated lots of interesting results.  The latest comes from Virginia, where the Virginia Economic Development Partnership has created an excellent new web tool for tracking and reporting state incentives.  Even if you have little interest in Virginia, the site is worth a visit as a great tool to improve transparency and public understanding around business incentives.
  • Prison to Proprietor report:  In addition to plugging these data resources, let me also promote a new report from the Aspen Institute’s FIELD program. This study looks at how entrepreneurship can be a tool to help integrate ex-offenders back into the community.  Finding employment—including self-employment—is the main factor in ensuring that formerly incarcerated people have a successful re-entry and post-release experience.   This study reviews the field and profiles some the fascinating local projects now operating—and succeeding—across the US.
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Trump and Clinton on Technology Policy: It’s 1992 Again!

Last month, I did a quick review of Clinton vs. Trump on small business policy.  Today, I’m taking a look at how the candidates compare on technology and innovation policies.   My analysis focuses tightly on issues directly related to technology and innovation, and does not cover other important related areas like education or workforce policies.  This is a very brief review.  For greater detail, I would suggest reviewing an excellent recent analysis from my colleagues at the Information Technology and Innovation Foundation, from which I’ve borrowed a bit.

A quick glance at the candidate’s websites and policy documents would make you think it’s 1992 again.   The contesting positions of the two candidates remind me of similar debates between Bill Clinton, George Bush, and Ross Perot.  On one side, we have Donald Trump as the advocate of trickle down.  His program appears to rely almost exclusively cutting taxes and regulations. In the process, this opening of the economy will stimulate business growth and create numerous other benefits for the economy.   Trump adds a Perot-ian spin with this tough talk on trade, pushing for a much tougher stance on trade enforcement.  Beyond these general guidelines, Trump is silent on nearly all other aspects of what we would consider technology and innovation policies.

If Trump is channeling Bush I and Perot, Hillary Clinton is channeling the “Putting People First” plan of her husband’s first Presidential campaign.   The issues are updated—after all, the World Wide Web barely existed in 1992.  However, her plans have a “New Democrat” feel to me—with their heavy focus on policy nudges, small scale reforms, lower cost tax breaks, and the like.

Nonetheless, Clinton’s technology plans contain a lot of good ideas.  In many ways, they present something of a wish list for technology policy wonks who have long pushed for many of these proposals.   As in other parts of her agenda, her technology and innovation policies are a grab bag, and there is no shortage of new concepts and ideas.   But, her core platform seems to revolve around the following concepts.  She plans to:  1) Invest heavily in STEM education and training, 2) Support more open immigration policies to attract innovators and entrepreneurs,  3) Seek to use technology and innovations policies in ways that promote economic equity, and 4) Envision a more activist role for government more generally—especially when compared to candidate Trump.

Again—as in other issue areas, 2016 presents yet another clear choice when it comes to what technology and innovation policy will look like for the rest of the decade and beyond.

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Inaugural Data from the Annual Survey of Entrepreneurs

The US Census Bureau, with support from the Kauffman Foundation and the Minority Business Development Agency, has just released the inaugural Annual Survey of Entrepreneurs (ASE).  This welcome new report will provide much-needed data on all businesses in the US—it tracks all firms with annual receipts of at least $1,000 and provides extensive demographic and economic data on these companies.   The data only examines firms with employees so it misses out on the growing 1099 Economy.  The latest data is from 2014 so it’s not as fresh as we’d like, but the information is helpful and will likely be heavily used by researchers.

Here are some quick-hit highlights from the ASE’s first edition:

  • 1 in 10 US firms is new (i.e. less than 2 years old).
  • 44% of US firms have been in business for more than 10 years.
  • Minority business owners operate 17.5% of US businesses. However, these firms generate only 3.3% of total US business revenue.
  • Our most thriving regions have significantly higher levels of new firm activity.  In many of these regions, anywhere from 20-25% of firms are new.  A related Governing analysis ranks metros by the proportion of young firms in each region.  Top metro locations for young firms include (in rank order):  Las Vegas, Miami, Austin, Orlando, and Dallas-Ft.Worth).
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Election 2016: Clinton and Trump on Small Business

Hillary Clinton released her small business plan this week, and I thought I’d take this opportunity to take quick side-by-side look at what the candidates are proposing to do in support of America’s entrepreneurs and small business owners.    At the broadest level, their proposals echo their personal styles.  Clinton’s plan is very wonky and very detailed, with lots of specific, focused ideas.  Trump’s plan is not really a plan, but he does throw out a lot of red meat related to cutting taxes, regulations, and red tape.

Let’s start with the Clinton plan which seemingly seeks to address every problem that ever bedeviled a small business owner.  She has detailed strategies for, among other things, business finance, start-up regulations, health care, and doing business with Uncle Sam.    Let me highlight a few of the newer and more interesting ideas in her plan:

  • Standardizing business license rules and costs across all states.  It’s not a huge hassle to start a business in the US, but it could be cheaper and less complex.  Clinton wants to incentive states and localities to use a cheaper and less burdensome standardized license tool.
  • Create a new standard tax deduction for small business.  If you’ve ever had to calculate a home office tax benefit or costs of your business phone/computer use, you’ll appreciate this idea that would create a single standardized credit that rolls up the complex mix of credits now in use.
  • Allow the deferral of student loan payments for new start-up entrepreneurs.   I want to see the details on this idea, but it does address a major impediment to business start-ups among younger Americans.

Her small business platform contains a lot more with promises to promote entrepreneurship for at-risk populations and regions, to promote greater tax and regulatory relief, and to improve the quality and responsiveness of programs run by the SBA and others.

Donald Trump doesn’t have a detailed plan, but he has laid out his basic ideas on his website and in a recent speech to the Detroit Economic Club.    Tax cuts are at the core of his agenda, and he promises that no American company will pay higher than a 15% annual tax rate—a significant cut from today’s corporate income tax rate which can be, on paper at least, as high as 39.6 percent.   Trump also embraces regulatory reform with a vengeance.  Upon taking office, he plans an immediate moratorium on all new regulations, and to remove “bureaucrats who only know how to kill jobs (and) replace them with experts who know who to create jobs.”   The identity of these experts is still to be determined but Trump puts great faith in the ability of experts to eliminate harmful regulations, improve our trade posture, and to support faster business growth.

Trump’s small business ideas are fairly mainstream—the basic outlines are not much different from what previous Presidential candidates and more mainstream Republicans have supported in the past.   In fact, there are close parallels to the ideas found in the economic plan now being promoted by House Speaker Paul Ryan.  Both plans follow a similar menu:  Use tax cuts and regulatory streamlining as the primary means to reduce burdens on entrepreneurs and free them to grow their companies.

As in all other parts of the campaign, the Clinton and Trump small business platforms could not be more distinctive and different.  Some of their rhetoric shares common themes, but their specific plans proceed in much different directions. They present a very clear choice, and a very different set of policies and priorities for supporting America’s small business economy.

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Rethinking Innovation Policy in the UK

The big hubbub over Brexit has distracted us from some other big policy changes now underway in Great Britain.  The new government, led by Theresa May, is also rethinking a number of other government priorities, including some potential new approaches to innovation policy.   Specifically, she has created a new Department of Business, Energy, and Industrial Strategy (BEIS) to oversee British innovation policies.  The use of the concept of “industrial strategy” represents a big change for Tory governments, which traditionally have clung to the tired and overused concept that “government can’t pick winners or losers.”  The BEIS has issued a formal inquiry and is requesting ideas and input, with a deadline of September 27, 2016.    The policy shift is already generating some interesting debate about the appropriate role of the UK government in supporting innovation policy.  (Here are links to a few interesting insights from the Institute for Government,  my colleague, Glenn Athey, and The Economist.)    Britain is facing some thorny innovation policy issues.  Of course, Brexit is a big issue, but other pressing challenges are also at play.  These include the role of foreign investment (triggered by debate over the potential takeover of ARM, a major UK chip maker), and revitalization in Northern Britain.  The Northern Powerhouse was a regional development strategy and leading priority of the previous government, and its status is also under consideration.    This will be an interesting debate worth following, and we can only hope that we in the US undertake a similarly rigorous and serious look at our innovation policy priorities after the November elections.

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Start-Up Day Across America

You probably didn’t know this, but yesterday (August 4) was the fourth annual Start-Up Day Across America.  This event was started by a group of Congressional “New Democrats,” led by Rep. Jared Polis and has been embraced by the White House as well.  While it may have Democratic origins, it’s been embraced by some Republicans too, and it now has the backing of 9 US Senators and dozens of Representatives.  It’s a pretty simple concept—on this day, Members of Congress spend time in their districts with entrepreneurs, innovators, accelerator managers, and other entrepreneur advocates.  It’s an opportunity to see what it really takes to be a successful entrepreneur, and to learn about how their actions can either help or hurt local entrepreneurs.   Politicians regularly meet with big employers (and big contributors), yet they often fail to interact with new, emerging businesses in their constituencies.  This simple event is one means to make that happen, and I hope that it continues to expand.  If you like this idea, encourage your Representative and Senator to sign up for next year.  Even better, consider creating a similar event for your state and local representatives who would benefit from such interactions with innovators too!

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Entrepreneurial Research Round-Up: July 2016

Here are few interesting entrepreneurship-related studies and projects that have crossed my in-box in recent weeks.   They’re all worth a look.

  • “Declining Entrepreneurship, Labor Mobility, and Business Dynamism:  A Demand-Side Approach:”  This interesting paper from the Roosevelt Institute examines the recent decline in US business dynamism, a topic often covered in this blog, too.   The rate of US start-ups and their subsequent growth has been declining in recent years, and the typical explanations focus on excessive regulation, student debt burdens and other mobility barriers, and other factors as potential causes.  This paper looks at demand side factors and argues that slackening labor demand is the prime culprit.  Career ladders for workers have become more tenuous, creating a lock-in effect for many workers.   As such, they lack the capacity and motivation to consider new job opportunities or the opportunity to advance their careers via entrepreneurship.  I’m not sure that I’m yet convinced, but this is an interesting alternative take on this important issue.
  • Unstacking the Deck:  Toward Financial Resilience for African American Entrepreneurs in the South:   Even in the “good old days” for entrepreneurs, African American entrepreneurs faced myriad challenges in accessing capital and building businesses.  This CFED field scan digs deeper into these capital access challenges and finds a complex mix of factors at work, including the need to improve financial literacy resources and to help African American entrepreneurs get more closely engaged in networks focused on business development.
  • Two new ranking studies are out and they contain some interesting findings.  The 2015-2016 Global Entrepreneurship Monitor Report, released earlier this year, assesses conditions in 62 countries, and finds, not surprisingly, that entrepreneurial activity levels vary greatly across countries.  Typically, developing (or factor driven) economies may see new business activity among 21% of the adult population.  For developed (or innovation-driven) economies, an average of 8% of adults is involved in these activities.   A deeper dive report assesses the global state of entrepreneurial finance, and finds that the ripple effects of the Great Recession are still with us.  New business financing is always tough to access, but it’s even tougher today.  The median global cost for a start-up was US$15,000—suggesting that new technologies are helping to reduce start-up costs.  But, finding larger amounts in getting more challenging.
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A New Social Safety Net for the Gig Economy?

As regular readers of this blog know, I’m a big fan of the emerging 1099 (or “Gig” or “Freelance” or “On Demand”) Economy.   I think these new ways of working have the potential to provide rewarding careers and lives, and also open up new economic opportunities for long distressed parts of our country.  But, as is often the case, there is no free lunch.   The freedom and choice of the 1099 Economy also means “freedom” from a basic social safety net of health care, retirement benefits and other social supports.   So, if we want the 1099 Economy to work, we’ve also got to find a way to create new forms of the social safety net.  We’re not there yet, but the necessary conversations appear to be starting.  The latest evidence comes from the Aspen Institute, which has just released a valuable primer, A Portable Benefits Resource Guide.  The guide takes a cold-eyed and realistic look at what it will take to produce “a flexible and stable safety net for a changing economy.”  It discusses key principles for portable benefits that can be accessed regardless of one’s employment situation, and also looks at the essential tough questions such as who pays, who gets covered, and what needs to be regulated.  It concludes with some cool ideas for getting the ball rolling on what will be a long pathway to a new kind of social safety net.  These early ideas include concepts like a portable benefits innovation challenge to test new ideas or the creation of an independent work ombudsman in towns and cities.   This guide and other ongoing work (check out this excellent study of self employment in the UK) suggest that we may be on the brink of some interesting new policy experiments.  Even in today’s political climate, we can still hope!

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What’s Next for Shale Gas Communities?

You don’t hear much about the shale gas revolution these days—for good reason, as the historically low cost of oil and gas have hammered workers, companies, and communities that were enjoying the shale gas boom as recently as a couple of years ago.  Nonetheless, most industry experts expect market conditions to improve, and we can expect that shale gas exploration and development will be return in the near future.   When you have a lull in activity, it’s often a good time to take stock and look back on recent performance.  That’s what the Pennsylvania-based Multi-State Shale Research Collaborative seeks to do with its new report card on state policies to help address the economic and environmental effects of Marcellus Shale activity in Ohio, Pennsylvania, and West Virginia.  The Collaborative has not been a big industry booster, so it’s not surprise that the report card contains some tough grades.  Generally, it finds that the three states are not doing enough to capture the full economic value arising from the development of the Marcellus Shale play in their region.   The authors find that states could do more to generate tax revenue from these activities, provide job opportunities to local residents, and build sufficient infrastructure to weather the industry’s boom and bust cycles.   Their grades are tough, with West Virginia receiving a C and Ohio and Pennsylvania getting incomplete grades.    The researchers implore state governments to build better systems and policies so that they are better prepared for when drilling activity picks up in the future.  They have also prepared a related guide to help local elected officials and community leaders address the economic, social, and environmental issues that accompany large-scale drilling activities.   These guides offer useful tips to help community leaders generate real economic development and community benefits from these new industries.

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STIRring Things Up In GovTech

GovTech is one of the more exciting, and underreported, business opportunities today.  There is a ton of very interesting and innovative work underway in areas where government programs, big data, and other new information technologies are intersecting.  Lots of investment is also flowing into this space, from new players like the DC-based 1776 accelerator and from large corporate players like Motorola and IBM.   According to the Govtech Fund, the potential market for productions and technologies to improve government performance could be worth as much as $400 billion.   The latest July/August 2016 issue of Government Technology offers a great introduction to the current state of play in the govtech sector, and it’s well worth your time.  The issue profiles lots of cool projects and ideas.  I was particularly intrigued with the ongoing Northern California Startup in Residence Program (STIR) which seeks to embed startups in key government agencies to help them deal with pressing problems like connecting homeless people to needed services, managing community volunteers, speeding up foster parent certification processes, or helping police report and analyze crime data in real time.   STIR is run by San Francisco’s Office of Civic Innovation and has received federal funds from the Economic Development Administration. It’s a very exciting concept that takes the basic idea of the Small Business Innovation Research (SBIR) program—fund small business R&D to solve government challenges—and updates it for the needs of today.  Instead of providing hands-off R&D dollars ala SBIR, STIR is hands-on and brings entrepreneurial thinking (and money too) into the day-to-day work of government agencies.  This kind of idea can and should be replicated elsewhere across the country.

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