Don’t Let the Recovery Fool You – A Mark Barbash Special

I’m delighted to be able to run this article from Mark Barbash, one of Ohio’s finest economic development types.  Mark and I have given talks together, run trainings together, staffed projects together and generally agreed with/argued with each other in lots of places over the last few years.  Mark combines an enormous depth of boots-on-the-ground experience with a strong ability to think independently and use that experience to get Good Things Done.

This article appeared briefly at LinkedIn, but through some dark evil magic disappeared from the site a couple of days later.  Who knows why.  But you should read it — and think about it.  A lot.

I’ll try to talk Mark into letting me run his upcoming articles in this series here as well, and I’ll forward any comments you want to leave here.  But you may also want to keep an eye on some of the economic development groups on LinkedIn, including Ohio Economic Development, Economic Gardening, Economic Development Specialists,

Here’s Mark:

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Executive Summary: While most indicators for 2014 are showing a generally recovering economy, millions of working-age American have been left out. This is an opportunity for pig with crutcheseconomic developers to make our work more impactful by adding value to our communities by not just growing jobs, but also growing family income and wealth.

 

The economic report for the end of the year provided encouraging news. About 252,000 jobs were created in December, and the improvement came across a wide range of industries. The national unemployment rate was 5.6%, down from 5.8% a month ago and down from 6.8% a year ago. (1)

But a closer look at the data makes clear that the current economic resurgence is a recovery for only some. And that should concern those of us who work in economic and community development.

Let’s look at several key economic indicators that tell a more nuanced story, and document a disconnect between the headline and the full story.

  • Long Term Unemployment Continues: While overall unemployment is down, there are still 2.8 million people among the long-term unemployed. Older workers and African Americans make up a larger share of this group, who also have a 20-40% harder time finding work.
  • Many People have Dropped Out of the Workforce: Many people who want to work can’t find work, and drop out of the labor market. The Labor Force Participation Rate actually dropped to 62.7% — an historic low.
  • While Productivity is Up, Wages are stagnant: Even if people can find work, because wages are not going up, many families continue to struggle to pay the bills.
  • Poverty Continues to be a Challenge: There are still 41.6 million Americans in poverty, in both rural and urban areas of the country. And 1 in 7 families have used a food bank in the past year, including many working families. (5)(6)

If this were a “normal” economic recovery, we would be seeing improvement in all sectors. But this recovery is not normal. It is very different than any previous recessions because these underlying problems — wages, part-time workers, discouraged workers — are not coming back as the same time.

One of the issues is that at the same time we seem to be coming out of the recession, the economy is going through a major transition, brought on by technology, demographics, risk aversion and globalization.

In short, this means that many people who would otherwise be able to get jobs are not able to do so. And when they do get work, wages are insufficient to really make any earnings progress.

 

What Does This Mean for Economic Developers?

In short, if wages and families do not grow, our communities cannot really grow.

We’ve all been working hard to be at the cutting edge of development (technology based economic development, creative class, economic gardening, global trade).

But when the job growth is not accompanied by wage growth and a reduction in poverty, it’s important that we step back, reevaluate, understand what’s happening in the lives of the people we have chosen to serve, and make sure our programs are responsive.

When I have this discussion with peers in the industry, I generally get two very sincerely held responses: The first: “Community development is not economic development.” And the second: “This should be left to the nonprofit human services and workforce sector.”

“That’s Someone Else’s Job”

The challenge with this response is NOT that there isn’t a need for specialized approaches to community problems. The people who work in human services and CDCs do indeed have important roles. And a community that doesn’t have a strong advocate for job training programs or for alleviating poverty has abandoned many of its citizens.

The real challenge is that by taking this hands-off approach, EDPros are missing opportunities to make our industry more impactful by infusing community value-add principles into our business attraction and retention efforts.

Here’s something to think about:

 

Value-Add Community Development

Building communities means adding value to the lives of its citizens. In my mind, Value-Add Community Development goes beyond just counting jobs. It’s about what makes for a good job that moves families toward a living wage, that enables a community to be economically and ecologically sustainable, and that helps to improve not just the businesses, but the community as a whole.

Many of these changes probably don’t involve turning the ship around (although I do think it’s time for a total reworking of the workforce development system).

It likely means making a course adjustment to keep us going in the right direction, but being more deliberate in linking our goals with our actions.

In several postings in the next weeks, I will take a look at what elected officials, policy makers and economic developers can do and are doing to help close this economic gap.

  • What does community value add mean to you? What are the metrics that show the health of our communities?
  • Do you agree that economic developers are missing the mark and not concentrating on the basics?
  • What “community value add” activities do you see in your community that have a focused effort to support strategies to assist all of our citizens

Notes:

(1) Report issued January 9, covering preliminary employment data through December, 2014.

(2) Al Gore

(3) While I don’t agree with a lot of their agenda, I do give a lot of credit to the work of Good Jobs First, a nonprofit group that focuses on promoting accountability in incentives.

(4) Even the Wall Street Journal has weighed in on this topic, highlighting among their posting “5 Reasons for the Slow Recovery in the Long Term Unemployed” from December, 2014.

(5) US Census Bureau

(6) Hunger in America Report, 2014

(7) Joe Scarborough in Politico points out that “but the .02 percent drop in unemployment was driven more by workers leaving the labor force than by new jobs.”

 

ABOUT THE AUTHOR

markMark Barbash has 30+ years of experience in community and economic development, in the public, private and non-profit sectors. He is Executive Vice President of Finance Fund, a non-profit Community Development Financial Institution (CDFI) in Columbus, Ohio. Check out Mark’s LinkedIn Profile.