Growing Pains for Rural Broadband

Over the past decade, governments at all levels have made big investments to help close the digital divide, especially in terms of bringing broadband and related services to rural areas. This work makes sense as success in today’s economy requires full access to the latest communication technologies.   A number of recent news articles note that, while progress has been made, rural areas remain far behind in both access to and use of the latest broadband tools and technologies.  Some of the remaining problems result from the higher costs of deploying broadband to rural areas or due to existing laws and rules that impede the roll-out.  For example, in North Carolina, state laws are blocking the expansion of successful municipal wireless networks to neighboring communities.

Even more worrisome:  there are indicators that take-up of broadband services in rural America—even in locations with high-quality service—greatly lags that of other regions.  A recent Governing article notes that nearly half of rural residents with access to high speed internet service have not signed up for service.   Senior citizens make up a large share of non-adopters, but 49% of low income rural households also lack access.  A related survey of rural and urban consumers (from Connected Nation) found that 39% of current non-adopters would purchase broadband at a lower price point.  This suggests that cost, not access, may be the biggest issue in expanding rural broadband access.   So, as we search for technological fixes, we should also be addressing the cost of services as well.

The good news is that many folks seem to share these concerns about both cost and access.  The Federal Communications Commission recently closed the application period for the first investments from its Connect America Fund.  This Rural Broadband Experiments initiative generated lots of interest.  Over 181 applicants (with projects valued at nearly $885 million) have applied for the $100 million in new funding.   Connect America and related efforts must be continued to ensure that broadband access—essential infrastructure in today’s economy—is available for all rural residents, businesses, and communities.

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Some New & (Somewhat) Random Development Resources

I have been at a lot training and conference programs over the past couple of weeks and have thus been exposed to a lot of new reports, studies, and the like that I’m struggling to keep up with.  But, in the interest of sharing, here’s a few that I have found interesting or worth a second look.

Cultivating A Competitive Advantage:  How Rural Counties are Growing Economies with Local Assets and Regional Partners- This National Association of Counties report contains case studies of 15 rural counties doing interesting economic development work in areas like business retention, transportation, food systems, and renewable energy.

Accelerate:  Founder Insights into Accelerator Programs:   Personally, I’m a little burned out on stories about business accelerators—I think I must see at least 10-12 per day lately.  But, this guide is a helpful compendium of how accelerators work and how they deal with some of the challenges they face around fundraising, marketing, and managing programs. Worth a read if you’re considering starting or applying to an accelerator.

Community Heart & Soul Field Guide:  The Vermont-based Orton Foundation has spent the past few years working on new approaches to community engagement and strategic planning in small towns, what they call “Community Heart & Soul.”  They’ve now produced a pithy and engaging guide for doing this kind of planning and it’s definitely worth a look.   I didn’t find any major new insights, but I think the Field Guide does a great job of covering the key issues and promoting practices that help communities develop in a way that nurtures and preserves their collective “heart and soul.”   You can download the Field Guide for free, but registration is required.

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Time for Urban Acupuncture?

I recently read a short and punchy little book with the great title of Urban Acupuncture: Celebrating Pinpricks of Change that Enrich City Life.  Author Jaime Lerner is well-known in urban planning circles from his stints as governor of Brazil’s Parana province and mayor of the city of Curitiba, where he introduced a host of innovations such as the city’s world-renowned bus rapid transit systems.

This is fun and easy read, and Lerner is a very likable character chock full of ideas.  He would be a pleasant companion over dinner, drinks or coffee.  The book is a series of short vignettes on various types of “urban acupuncture,” which Lerner refers to as “pinpricks” of action—projects, people, and initiatives—that ripple out and have outsized impacts on city life.  His message is very hopeful and inspiring.  When done right, small actions can change the trajectory of a city.   Much like acupuncture!

Urban acupuncture can take many forms.   Chapters include dissections of how 24-hour shops enliven street life, how waterways and river access improve city life, why buildings with dignity matter,  and how cities can benefit from spaces  that embrace, among other things, music, silence, light, and  memory.   To his credit, Lerner doesn’t try to give a template or guide to urban acupuncture; he simply tells stories of how it works.   If you wanted to briefly summarize his perspective, I’d suggest this passage:  “The city is an integrated structure of life and work.  The city is a melting pot of human activities.  The more you blend incomes, ages, and activities, the more human the city becomes.”

Kudos to Island Press and the Knight Foundation for supporting publication of this book.  You can learn more about the book and Lerner’s speaking tour here.

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Do People Move to Avoid Taxes?

Do people and businesses move to avoid high taxes?  That’s certainly the claim of many politicians and policy advocates who contend that wealthy residents and successful businesses flee high tax states like California to seek out more hospitable business climates elsewhere.    Given that many people seem to think these tax migration claims are a “fact,” it’s surprising that there is so little evidence to back this view.   A few years ago, the Public Policy Institute of California did a very useful analysis, estimating that about 1.7% of California’s job loss between 1992 and 2006 was due to company relocations outside of the state.  Instead, nearly all of the state’s job creation—and job loss—was home grown—due to the expansion or contraction of existing businesses.  Now, we have another set of similar findings in a new study by the Center on Budget and Policy Priorities entitled: State “Income Migration” Claims are Deeply Flawed.

This research, by Michael Mazerov, examines the economic literature and finds fault with two basic claims made by many observers:

1) There is little evidence that people move in response to differences in interstate tax levels.  Instead, most people move for more prosaic and hum-drum reasons.  They took a new job, moved for family reasons, sought a nicer climate, or wanted more affordable housing.

2) There is little evidence that high-tax states are losing residents due to their less favorable business conditions.  Moves from high-income tax to low-income tax states are not any higher than moves in the reverse order:  from low-income tax to high-income tax states.  Moreover, very few Americans actually move across state lines each year.  About 1.5-2 % of Americans move each year, and that rate has been declining in recent years.

So, what is happening?  Americans certainly do move, but they rarely move to avoid taxes.  Instead, they move for a better climate, better schools, or better employment opportunities.  Between 1993 and 2011, every state (except Michigan) that lost residents still saw an increase in local jobs and income.  Thus, even when people do move, it doesn’t seem to have large-scale economic impacts.

These trends don’t mean we should ignore out-migration.  If people are leaving a state in droves, it’s not a good thing—especially if out-migrants have high demand skills or high education levels.   And, even if it’s true that people don’t move to reduce their tax burden, out-migration has hugely negative economic impacts.  As talent leaves a state, the ability to attract or grow companies weakens, and the quality of schools, parks and other institutions declines.  If you fear out-migration, act to stop it.  But, don’t assume lower taxes will make people stay.

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Rethinking the Public Library

Economic developers partner with countless organizations, but we regularly neglect one of the most important public institutions that operates in most U.S. communities:  the public library system.   Libraries are more than simple repositories of books and information.  They can be tremendous assets to help build talent, to help businesses access new markets, and to improve cultural understanding throughout a community.  That’s why a new report from the Aspen Institute’s Dialogue on Public Libraries is so important.

“Rising to the Challenge: Rethinking Public Libraries” envisions a new concept and role for a “library of the digital age.”    Among the interesting concepts of this study is a new role for the library as a community anchor, where a mix of local residents can meet to learn and engage with one another.  A “fully loaded” version of this library might include deliver co-working space for entrepreneurs and freelancers, an early education program for young children, workforce and education programs for immigrants and seniors, coding classes for teens, and learning opportunities for all.    The report also presents a vision of better connected libraries so that even small rural locations can tap into state of the art technologies, tools, and data resources.    This is not just about providing access to databases or e-books.  Under the new models, libraries might include co-working spaces, maker spaces, video conferencing facilities, or access to new video and editing tools.   Through these tools and others, libraries can help support community development and build a stronger civic spirit as well.  In addition to the new project report, the other supporting materials of the larger Dialogue are also worth a look.

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America’s Most Promising Rural Entrepreneurs

Yesterday, I spent an interesting day over at Georgetown University for the inaugural Rural Entrepreneurship Summit, jointly sponsored by Georgetown and the American Farm Bureau Federation.   The summit included a good cross section of rural advocates and entrepreneurs, along with some high quality speakers, including Agriculture Secretary Tom Vilsack and new SBA chief Maria Contreras-Sweet.   However, the day’s real highlight was the announcement of the ten semifinalists in the Rural Entrepreneurship Challenge, America’s first national business plan focused on rural entrepreneurship.

You can find a list of semi-finalists here.   It’s an interesting and eclectic group that hails from all over the U.S.  Semifinalists range from a mobile veterinary clinic to a STEM training program to a hydroponic crop grower to a moving and relocation service focused on helping senior citizens.   This inspiring group of entrepreneurs must now compete for the final prize, which will be awarded at the Farm Bureau’s annual convention in January 2015.

If you want to learn more about the entire Rural Entrepreneurship Initiative, you might consider joining us for our next webinar (held on October 28, 2014 at 3 PM) which will examine how rural entrepreneurs can access financing to grow their companies.   You can learn more and register here.

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Is the 1099 Economy Becoming the “New Normal?”

A very informative new survey on the 1099 Economy is out from the Freelancer’s Union, the first and leading organization seeking to promote the interests of 1099ers, freelancers, and independent workers.  (Note:  The Freelancer’s Union was formerly known as Working Today.)   The study estimates that 53 million Americans now work as freelancers—an astounding 34 percent of the total U.S. workforce.   All indications suggest that these numbers will grow in coming years.   Surveyed freelancers project an increase in demand for their services, and a very large share of existing workers (80%) note that they would consider moonlighting or doing other work on the side.

The report also offers a useful typology of the 1099 economy, dividing freelancers into five groups:

  • Independent Contractors (traditional freelancers)—40% of freelance workforce
  • Moonlighters (those with a day  job too)-27%
  • Diversified Workers (multiple jobs)-18%
  • Temp Workers-10%
  • Independent Business Owners-5%

The categorization scheme is helpful, although I might quibble with these percentage shares.  For example, the share of independent business owners is much smaller than seen in other data sources.   The categories highlight a key point:  there are many points of entry into the 1099 Economy:  some by choice and design, while others reluctantly accept this new work status.

The survey also includes some useful findings on key issues facing freelancers.  These include the most important issues of finding work and generating steady income.   The report also notes that the freelancing life is slowly becoming easier as new services and organizations (like the Freelancers Union) are now targeting the 1099 Economy.   As I have been arguing for years, providing new support tools for 1099ers ought to be a high priority for economic development organizations.  It’s not happening yet, but I hope that the hard facts presented in this survey and elsewhere can help turn the tide.

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EntreWorks Insights, October 2014 issue now available

The October 2014 issue of our regular e-newsletter, EntreWorks Insights, is now available. This issue focuses on how American manufacturing will be transformed (or not) by the current shale energy boom.   You can subscribe and access previous issues here.

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Tackling Wealth Inequality

Yesterday, I attended a very interesting event sponsored by the CFED-sponsored Asset Building Policy Network, a coalition of organizations focused on supporting asset building policies such as individual development accounts and more consumer friendly banking policies.  The topic was “Unfinished Business:  Winning the Battle for Economic Opportunity,” and the discussions focused on what needs to be done to make progress in the fight against growing income and wealth inequality.   It was an enlightening and sobering discussion, but I’ll just highlight two big takeaways for me:

1)      Income inequality is a growing issue, but the challenges of wealth inequality are even more profound.   We’ve all seen reports about growing income inequality in the U.S., but the findings on wealth inequality are even more sobering.   Many Americans, especially Blacks and Latinos, are living one calamity away from economic disaster.   Roughly 1/3 of Blacks and Latinos have no financial assets whatsoever—compared to 14% of Whites.  When it comes to available liquid assets (those that could be immediately deployed in an emergency), the situation is more scary.    African Americans have a median liquid wealth of only $200; Latinos hold a median level of $340.  Meanwhile, many Whites ($23,000) and Asians ($19,500) have access to liquid assets, and overall net worths that are 13-15 times higher than their African American and Latino counterparts.  (All data used here come from the May 2014 Beyond Broke study by the Center for Global Policy Solutions.)

 

2)      Family wealth generation and preservation is an inter-generational matter.   The real generators of household wealth pass across generations—in the form of home ownership, educational benefits, and inheritances that come from a lifetime of hard work and savings.   A good job can help reduce immediate gaps, but it might not address sustained wealth gaps on its own.  For this reason, we may need to think bigger and consider other kinds of policies that address the wealth gap head on.  One example might be the use of baby bonds where each newborn is provided with a small savings account (e.g. for $500) that will grow and can be used for needs like education when the child reaches adulthood.  The UK experimented with this approach in 2005, but the program was eventually ended by the current government.

Big ideas can also be accompanied by some smaller scale solutions such as expanded use of coaching where people can gain access to “coaches” who offer advice on financial management, savings, and other strategies.   Yesterday, NPR’s All Things Considered profiled a successful model program used in Pennsylvania and elsewhere.  Under the Circles program, poor families are matched with 3-4 middle class volunteers known as “allies.” These allies provide coaching, advice and support on a host of issues from commuting to child care to savings to grocery shopping strategies and the like. This kind of intensive hands-on coaching has been shown to have big impacts in helping families move out of poverty.

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Reshoring Manufacturing Jobs: We’re Still Waiting

Like many people, I’ve been getting pretty excited when I read studies about the potential for reshoring of manufacturing jobs back to the U.S.   Many trends, such as technology changes, changing energy cost structures, and rising labor costs in China and elsewhere are all coming together to make America a more competitive location for manufacturing facilities.  I don’t need to belabor the potential benefits of reshoring—more capital investment and, most importantly, a larger base of high quality jobs for working families.    Unfortunately, preliminary results from a study by researchers at MIT’s Center for Transportation and Logistics suggest that the promised new jobs and investments have yet to materialize.  The researchers, Jim Rice and Francesco Stefanelli, examined fifty recent announcements of large-scale reshoring projects and found that few of these announced projects were ever completed.   In most cases, the announced project has not yet happened.  In a few instances, the deal occurred but few new jobs actually ensued.

It is possible that many of the announced deals will ultimately happen—delays in projects of this type are the norm.   But, the findings do suggest that we should remain somewhat cautious in our hopes for reshoring—even when our hearts push us to do otherwise.    The resurgence of U.S. manufacturing is not going to magically happen on its own.  It’s going to take lots of hard work and a commitment to new investments, workforce training, and on building a more competitive and responsive business environment for manufacturers of all sizes.

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