November 7, 2011
The Skinny on Community Growth
I am fortunate that one or more times a week I am invited to speak at different places around the state. This is a great gift because I learn so much from the questions and interests of various groups. One question that looms over every talk is, “What can we do to increase the number of jobs in our community?”
There are surprisingly easy yet few answers to this question. First I say, make sure you don’t get annexed by Illinois or Michigan. Living in a state with a solid fiscal environment and tractably small public debt is a great boon in these times. I am quick to point out, however, that these times won’t last, and that even now, the quality of the workforce—or human capital, in economics jargon—matters more than anything else in the long haul of economic development. For many communities this is disagreeable news.
This recession is poignantly amplifying the cost of a skills gap in a community. The places the highest and longest unemployment rates are those with an excess of unskilled workers. School performance in these communities is a double-edged sword. Skilled and mobile workers choose places with top-notch schools. In turn, top-notch schools prepare skilled workers. More than a third of Indiana’s schools perform badly enough to crush the economic prospects of their communities. The Indiana Department of Education has a wonderful tool for assessing schools based on their achievement and growth. It is the most important indicator of economic development in a community.
If you live in a school district that is below average in achievement and below average in achievement growth, you had better get angry. If the school does not improve in two or three years, vote with your feet and move. If you stay, expect the value of your home to decline and the local economy to shrink. But, more than schools matter.
A well-run local government that makes an investment in the quality of a community is nearly as important. Two communities stand out. The palpable success of R and D mayors in Muncie and Kokomo respectively demonstrate that it isn’t a political party, but a policy that turns communities around. What makes these communities different is a conscious decision to invest in things that make the city more livable and attractive. This is a big change in both places, where a half decade ago local governments existed mostly to secure jobs for public employees. That model failed spectacularly. But even in successful Kokomo and Muncie, much is left to do. It will take a full generation of investment to turn these communities into places that will comfortably grow and prosper.
These are often uncomfortable answers to the jobs question. It is far easier to offer a tax incentive or launch a marketing campaign, but these things don’t work by themselves. Fixing schools, paving roads, building sidewalks, sprucing up parks and cutting government waste are hard, long, inelegant and thankless tasks—but are the ones that really matter.
About the Author
Educational Attainment, the 21st Century Fund and the Future of SchoolingIndiana ranks 42nd in educational attainment.
Big Savings for Ending Prevailing WageMy statistical models show that repealing state prevailing wage laws save taxpayers money.
Re-Thinking Economic Development A large share of the most mobile families—perhaps half—no longer need to live near where they work.
Money Illusion and InflationPrice fluctuation could cause inflation to last longer, but it didn’t cause the inflation, it simply extends the pain.View archives