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.
We’ve just sent out the latest issue of our e-newsletter, EntreWorks Insights. Our previous issue examined the adjustment challenges facing America’s coal-dependent communities. This issue seeks to look at the good news, and highlights some promising and innovative projects underway in Appalaahia and elsewhere. You can subscribe here.
The gig economy is a hot topic today, and I could probably do a daily blog post on the latest research and findings on its impact and importance. But, with the booming interest, it becomes important to separate the wheat from the chaff. A new study of the gig economy from the McKinsey Global Institute falls into the “worth a look” category. Independent Work: Choice, Necessity and the Gig Economy is one of the most comprehensive looks at why people opt for independent work and what they think about the experience. The McKinsey researchers surveyed over 8,000 people in the US and Europe, finding that as many as 162 million people (20-30% of the workforce) participate in some form of independent work. That’s a pretty astounding figure.
They identify four categories of independent workers. Free agents and casual workers choose independent work, while the reluctants and the financially strapped are forced by necessity to pursue independent work as part of income patching process. For many economic developers, the free agents are the group of greatest interest. They are about 30% of the independent workforce. They tend to be satisfied with their work, showing satisfaction rates much higher than those in traditional jobs. Via independent work, free agents working in high demand fields can actually boost their incomes, when compared to those on a traditional career ladder.
If economic developers are serious about promoting equity, they’ll also need to address the challenges facing the reluctant and financially strapped independent workers who collectively compose another 30% of this workforce. These workers face the opposite situation from their free agent counterparts. They make as much as 18% less than their compatriots in traditional jobs, and they are also more likely to be living in poverty and to be receiving government benefits. The pressures of two-tiered economy appear to be even more pronounced for those living and working in the gig economy.
Last week, I attended an interesting (really!!) event on retirement security in the new economy, sponsored by the Brookings Institution’s Retirement Security Project. The event, and related study, offered another look at the thorny issue of how we provide a social and economic safety net for workers operating in the 1099 or “Gig” Economy. As we regularly discuss in this blog, the 1099 Economy offers tremendous opportunities for more flexible work and career options. But, at the same time, this new way of working creates many risks for the workers themselves. Most public attention has been on the fate of on-demand economy workers who toil with relatively low pay from firms like Task Rabbit or Uber. But, another challenge comes in the form of retirement—how can we make it easier for 1099 workers to save sufficient funds for their retirement?
Sadly, this independent workforce doesn’t do retirement savings well. They make less money and generally don’t have easy access to retirement savings tools. Various types of IRAs are available, but, at present, less than 14% of eligible people contribute to them in a given year. If we peer out into the future, we may see a 1099 workforce that works for decades at lower pay, limited health and other benefits, and little if no retirement savings. This is not a formula for a secure retirement, or even for building wealth over one’s lifetime.
The Brookings research paper presents a variety of tools and options for closing this retirement gap. I won’t get into all the potential options here, but the general consensus is that the problem is challenging, but fixable. As the fintech sector gets more market reach and more sophistication, new IT tools are emerging. At the same time, we need to focus policy solutions on the large share of 1099 economy workers who have both “real” employment and 1099 income and those who may move from covered employment to independent work over lifetimes. Here, the solution involves creation of a universal retirement account, which, in practice, may simply be a retirement account that moves with you across your working life. This account is available to you regardless of your work status, providing a ready source to invest retirement funds and preventing the many hassles that occur as you have to create a new retirement account for every new job or new career circumstance. Models like this are being used elsewhere, like New Zealand’s KiwiSaver plan. Not surprisingly, creating this universal retirement account number is much more complicated than it sounds, but, it is doable even in a political environment as charged as ours. This paper is yet another sign of important new thinking about new ways of working and how we can integrate the independent workforce into our current social safety net systems.
Along with our partners at the Center for Rural Entrepreneurship and the Center for Regional Economic Competitiveness, EntreWorks Consulting is soon kicking off an interesting research project examining the state of entrepreneurial ecosystems in Appalachia. This project is on behalf of the Appalachian Regional Commission so it will be examining what’s happening with entrepreneurs in an extended region that includes 13 states. We’ve done some past work on this topic for ARC, but that was some time ago. So, we’re taking a new and fresh look at the state of entrepreneurship in the region. We know that there are many areas facing tough challenges due to declines in the coal industry. Yet, there are also lots of exciting things happening across the region with locations like Chattanooga (TN), Huntsville (AL), and Roanoke-Blacksburg (VA, among others, gaining reputations as innovation hotspots. This project has lots of components, including a look at new data on entrepreneurial ventures and a guide to business resources in the region. I’ll be providing regular updates via our blog and elsewhere, but we also need your help. If you know of interesting programs or entrepreneurs in Appalachia, please share them with us at info (at) entreworks.net. Just as an FYI, I will also be attending next week’s International Economic Development Council (IEDC) conference in Cleveland, and would welcome the opportunity to connect with you there, too.
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.