Month: July 2016

Upjohn Institute Report: Evidence shows that the ACA is pushing a subset of U.S. workers into involuntary part-time jobs

The Affordable Care Act (ACA) requires firms with 50 or more full-time equivalent employees to offer health insurance to full-time employees, defined as those averaging more than 30 hours a week. Many observers worry that firms may avoid this mandate by using more low-hours part-time workers, but early evidence has been mixed. New research by Marcus Dillender, Carolyn Heinrich and Susan Houseman suggests employer efforts to avoid the health insurance mandate have forced up to a million U.S. workers into part-time jobs when they wanted full-time work.

In previous work, Dillender, Heinrich and Houseman estimated that when the ACA was passed, about five percent of wage and salary workers could be vulnerable to such changes in their terms of employment. In a new working paper, they use Current Population Survey data to analyze changes in low-hours part-time employment since the passage of the ACA. Their study’s methodology uses Hawaii as a comparison group; Hawaii has had a much tougher employer health insurance mandate for decades, and so the ACA mandate should not affect Hawaiian employers’ decisions to use part-time workers.

Although the authors find no effect of the ACA mandate on part-time employment in most industries, they estimate that the mandate increased low-hours, involuntary part-time employment by two to three percentage points in retail, accommodations and food services.  That translates to between 500,000 and one million workers stuck with fewer hours than they want to work. Variable weekly scheduling and low-hours, part-time work were already prevalent, and consequently reducing some workers’ hours to side-step the mandate may be more attractive, in these industries.

Read Effects of the Affordable Care Act on Part-Time Employment: Early Evidence, by Marcus Dillender, Carolyn Heinrich, and Susan Houseman

Worthy Read: The Logic of Economic Development: A Definition and Model for Investment

Interesting white paper by US EDA on the logic of economic development.

Abstract: Despite significant public resources devoted to promoting innovation and entrepreneurship there is little agreement about how to measure outcomes towards achieving the larger objectives of economic development. This paper starts by defining economic development and then considers the role of government, arguing that public policy should focus on building capacities that are beyond the ability of the market to provide. This shifts the debate towards a neutral role of government as a builder of capacities that enable economic agents, individuals, firms or communities to realize their potential. Download here.

Ashtabula County Community Population Changes, 2000-2015

In 2015, Ashtabula County had an estimated population of 98,632, about 4,000 (-4%) less than 2000. Half of Ashtabula County’s population lived in 10 cities and villages.

Five of these communities lost 10% or more of their population from 2000 to 2015. Ashtabula City had a loss of 2,800 (-13%) and accounted for two-thirds of the county’s population loss. Geneva City and Geneva-on-the-Lake Village also had significant losses, while areas along the Pennsylvania border showed modest growth.

Ashtabula, Geneva and Saybrook townships together accounted for -4,500 in population losses, while a few areas along the Pennsylvania border showed modest growth.

Download the July 2016 analysis of community population changes during 2000-2015.

 

Coding Boot Camps: Good Idea

By Eli Dile, IEDC

When you picture a typical workforce development program, what do you see? Maybe an intensive welding class, or tool-and-dye training? Workforce developers have mastered the art of delivering quick, cost-effective training that provides economic opportunity to low-skill workers, while simultaneously helping employers staff hard-to-fill jobs.

But as important as manufacturing employment is, it continues to shrink. So how can the approach be applied to growing technology fields? Fortunately, one such model already exists: coding bootcamps.

TEN-HUT!

Coding bootcamps such as General Assembly, App Academy, and Makersquare challenge the traditional higher education model by teaching in-demand technology skills in a matter of weeks – for a fraction of the cost of a computer science degree. Students attend intensive, multi-week courses that teach software languages such as JavsScript, HTML, and CSS. Immediately after graduating, students are prepared for jobs in web, software, or app development, and can earn starting salaries of $60,000 or more. Some bootcamps even help with job placement upon graduation. App Academy boasts a 98 percent hiring rate for its graduates, and General Assembly maintains hiring partnerships with more than 2,500 companies.

Although most are located in large metros, many offer courses online. And they aren’t intended solely for young people – bootcamps promise new employment trajectories for mid-career professionals and beyond. Many go so far as to claim that “anybody can learn to code.” Their popularity has grown as tech companies continue to lament the persistent U.S. STEM skills gap.

For these reasons, coding bootcamps are gaining recognition as a sort of vocational school for the digital age. Of course, manufacturing and information technology are very different fields, but coding bootcamps and trades training share many commonalities. They’re fast; employer-driven; offer economic mobility; provide new career pathways for people of all ages; and don’t require a college degree for their graduates to get a job.

“Nobody really cares about your education in this field — it’s can you do it, or can you not?” said Matt Kenefick, a web developer who now makes six figures with just a high school degree.

Dev Bootcamp / CC BY 2.0Technology companies have struggled to hire web developers. In 2014, there were 5 million unfilled computing jobs available in the United States. Some companies even express a preference for bootcamp grads or self-trained coders, noting computer science departments at four-year colleges can be slow to update curricula to keep pace with rapidly advancing technology. In 2010, about 38 percent of web developers had less than a four-year college degree, according to Census data.

“Not all programmers who go through college are good programmers,” according to Greg Doermann, chief technology officer of Utah-based Perfect Pitch. “If they fit, it doesn’t matter if they went to college or not.”

Bootcamps seek to address this skills gap by partnering with technology companies and tailoring course offerings to their immediate needs. Although behemoths such as Google still won’t hire those without a bachelor’s degree, opportunities for non-degree holders exist in varying levels across the tech spectrum.

For an institution that didn’t exist a mere five years ago, the coding bootcamp has proliferated across the United States and abroad. They’ve even won the attention of the Oval Office – President Obama’s TechHire initiative is experimenting with them as a new pathway to the middle class.

They’ve piqued the interest of economic developers as well.

Economic and workforce developers test the waters

In Nevada, after winning the location of Tesla’s “giga-factory,” the state created several IT-focused workforce grants designed to rapidly scale its tech workforce, including an “employer-driven information technology bootcamp” in Henderson. Hennepin County, Minnesota, has incorporated bootcamps into its larger IT-focused workforce development initiatives. And the Indiana Economic Development Corporation has recognized their value, providing $1.3 million in incentives to help Carmel-based Eleven Fifty Academy expand.

“Eleven Fifty plays a crucial role in helping Hoosiers develop the skills they’ll need to work at growing companies across our state,” remarked Lieutenant Governor Sue Ellspermann during the award announcement.

Although bootcamps cost far less than the average bachelor’s degree, they’re still not cheap. Most cost about $10,000, and because they’re unaccredited, students can’t access federal loans to pay for them. But community colleges are increasingly adopting the model, providing comparable service at a lower cost.

Central New Mexico Community College’s Deep Dive Coding Boot Camp provides intensive tech training and is used by the New Mexico Partnership as a business attraction tool. Cleveland has emerged as a competitive tech city, complete with fast-track coding courses at the Cuyahoga Community College. Last year, Vancouver-based Lighthouse Labs was contracted by the government of Yukon to launch a remote bootcamp for students in Whitehorse.

Coding and economic mobility

Bootcamps have already provided new career paths for frustrated liberal arts grads who were unable to apply their education in the job market. As entry-level tech jobs pay far better than those in retail or food service, coding also is increasingly viewed as a new source of economic mobility for minorities and disadvantaged groups, much as manufacturing was viewed in the 20th century.

“If they fit, it doesn’t matter if they went to college or not.”

It’s hard not to be inspired by their successes. Tech’s diversity problem is well documented, and organizations such as Code Now are breaking down barriers for inner-city youth.  In Detroit, Sisters Code is a women-only organization that aims to provide new, more-lucrative career pathways for its students. The Last Mile is teaching software development to inmates doing time in San Quentin prison. And in Pikeville, Kentucky, startup Bitsource is attempting to turn out-of-work coal miners into Appalachia’s first wave of techies. Even Prince recognized their potential.

Great potential, but caveat emptor

The notion that “anyone can learn to code” is a bit of hyperbole, though it’s true that anyone with at least some aptitude and a sincere desire to learn can become a web developer. Some bootcamps offer introductory courses so students can determine whether a career in tech is right for them. Because their scope is far narrower than a four-year computer science degree, a bootcamp grad will have fewer career options. And technology is constantly evolving, so if entry-level tech workers want to advance, or even stay relevant in their current positions, they will have to be lifelong learners.

Coding bootcamps are still a new phenomenon, and some fear a gold-rush mentality will make it easy for less scrupulous ones to fleece desperate job-seekers out of thousands. The classes are unregulated, and some observers have expressed skepticism over job-placement rates, which are self-reported. (The industry as a whole could do a better job with transparency in this regard.) And even though they’re advertised as a bargain compared to a computer science degree, they’re still far from cheap.

However, community colleges’ embrace of the bootcamp model is ameliorating many concerns over cost and accreditation. And as far as ensuring students will have a job after they graduate, nobody knows the hiring needs of local companies better than the economic developer. For regions that are growing their tech sectors, it’s a model that may be worth exploring.

Startup job and spending numbers skyrocket in JumpStart survey

From Crain’s Cleveland Business.

The 270 startups who responded to a survey conducted by JumpStart spent $777 million on labor and other goods and services in Ohio last year — nearly triple the $279 million figure from the 2014 survey.

Those companies, who work with JumpStart and 14 other local organizations that receive state funding, also employed 2,313 Ohioans in 2015, up from 1,490 last year, according to economic impact reports based on those surveys.

So some of those businesses must be growing by massive leaps and bounds, right? True, but least a few larger startups that didn’t respond to last year’s survey submitted data this year.

Even so, some of the businesses that responded are definitely growing. The best evidence is on the last two pages of the 2015 report, which was put together by Cleveland State University.

That section analyzes data submitted by 42 companies who have responded to the survey for five years in a row. Those companies added 218 employees in Northeast Ohio last year and 643 people throughout the state. (The numbers in the tables on those pages are even bigger, because Cleveland State uses common economic formulas to estimate the impact that these companies have on their suppliers and the broader economy.)

So why are local organizations generating economic impact in other parts of the state? For one, the survey was sent to companies that have received investments from North Coast Angel Fund, which occasionally invests in startups outside of Northeast Ohio.

Plus, some companies that work with JumpStart and other organizations have operations in other parts of the state.

For instance, JumpStart is an investor in a company called CoverMyMeds, a fast-growing health technology company that employs more than 400 people, mostly in Columbus (it also has a new office in Highland Hills). And North Coast Angel Fund is an investor in Assurex, near Cincinnati. That gene testing company is fast approaching 500 employees, according to North Coast Angel Fund executive director Todd Federman. Assurex had 220 employees in October 2014, according to media reports.

Did either of those companies have an impact on the survey? JumpStart won’t say.

The growth is occurring because many of the startups are now mature enough to start scaling up, according to JumpStart CEO Ray Leach.

“Now they’ve hit the hockey stick,” he said.

But like we said, some businesses who didn’t respond to the survey last year responded this year. That’s one reason why the overall employment and spending numbers are so much higher than last year’s numbers (the report refers to the spending numbers as “output”).

In a news release that came out today, July 15, Leach said the report confirms “a suspicion we’ve had for some time that [the startups] were generating significantly more impact than we were tracking.”

But “quite a few companies” here and throughout the state did grow significantly last year, said Candi Clouse, a program manager at the Center for Economic Development within Cleveland State’s Levin College of Urban Affairs.

“This is the tipping point that we’ve been hoping to see for years,” she said.

The 270 startups have at some point received assistance from at least one of 15 local organizations affiliated with the Ohio Third Frontier’s Entrepreneurial Signature Program, which funds services for entrepreneurs.

In addition to JumpStart and North Coast Angel Fund, the other organizations are: the Akron Global Business Accelerator, BioEnterprise, BioHio Research Park, Braintree Business Development Center, Flashstarts, Great Lakes Innovation and Development Enterprise (GLIDE), The Incubator at MAGNET, Northeast Ohio Medical University, Ohio Aerospace Institute, Ohio Agricultural Research & Development Center, Tech Belt Energy Innovation Center, University of Akron Research Foundation and Youngstown Business Incubator.

Job Training Works

MDRC, a nonprofit, nonpartisan education and social policy research firm, released encouraging results today from a demonstration and evaluation of WorkAdvance, a sectoral training and advancement program tested in four sites in New York City, Northeast Ohio, and Tulsa, Oklahoma. Each targeting different sectors, the four programs provided sector-based skills training for jobs that have career ladders or pathways in information technology (IT), environmental remediation, transportation, manufacturing, and health care. Together the four WorkAdvance sites helped participants earn an average of 14 percent (or nearly $2,000 in annual income) more than they otherwise would have earned two years after they entered the program. The effects differed by site, ranging from no earnings gain in one site to a 26 percent increase in the most effective site.

These results confirm earlier studies that sectoral programs increase earnings among low-income individuals. Even when a program is well implemented, however, the benefits to participants can take at least a year to emerge for experienced providers and longer for those that are new to the sectoral strategy.

MDRC conducted a rigorous random assignment study of WorkAdvance in four sites: Per Scholas (in New York City) targeted the IT sector; St. Nicks Alliance (also in New York City) focused on environmental remediation; Madison Strategies Group (in Tulsa, Oklahoma) focused on transportation and, later, manufacturing; and Towards Employment (in northeast Ohio) targeted health care and manufacturing. The two-year follow-up results released today in a summary report are based on unemployment insurance records and a survey, and conclude that WorkAdvance:

  • Increased training completion, credential acquisition, and sector employment. Overall, because of WorkAdvance, participants were more likely to complete skills training and acquire a credential (especially in the targeted sector) than they would have been without access to the program. For example, in each of the four sites, participants were more likely than the control group to complete training by 31 percentage points or more. They were also more likely to attain a vocational training credential in the targeted sector by 25 percentage points or more. At all four sites, participants were more likely to become employed in a job in the targeted sector, by 12 percentage points (St. Nicks) to 41 percentage points (Per Scholas).
  • Increased earnings in three of four sites. The most experienced sectoral provider, Per Scholas, boosted earnings by more than $3,700 (or 26 percent) above the control group level in Year 2. The Per Scholas program also increased income, reduced material hardship, reduced public assistance usage, and increased overall life satisfaction. At Madison Strategies Group and Towards Employment, statistically significant impacts on earnings began to emerge in Year 2. Earnings effects were also substantially larger for a later cohort, partially reflecting the deepening experience of these two agencies with what, for them, was a new approach. At St. Nicks Alliance, impacts on earnings had not yet emerged by Year 2.
  • Increased earnings among the long-term unemployed. WorkAdvance operated during the long wake of the Great Recession of 2007-2009. During this period, the number of people who qualified as long-term unemployed increased markedly, and there was significant concern about the likelihood of reengaging this group in the labor market. On average, WorkAdvance was able to increase earnings for this important group.

Read more.

Jobs Gained by Business Size Group in Cleveland Metro Area, 2010-2015

JOBS GAINED 2010 % of TOTAL 2015 % of TOTAL
BUSINESS STAGE 108,025 100 139,816 100
   Self-Employed (1) 3,508 3.2 2,978 2.1
   2-9 Employees 45,159 41.8 75,288 53.8
   Stage 2 (10-99) 31,180 28.9 39,550 28.3
   Stage 3 (100-499) 10,700 9.9 12,247 8.8
   Stage 4 (500+) 17,478 16.2 9,753 7.0
GROWTH FACTORS 108,025 100 139,816 100
New Startups 51,554 47.7 59,952 42.9
Expansion Startups 20,541 19.0 37,955 27.1
Expansions 35,196 32.6 40,382 28.9
Move In 734 0.7 1,527 1.1

Who is creating the most new jobs in the Cleveland metro area? The table above says that businesses with 2-9 employees are creating 54% (75,288/139, 816) new jobs generated in 2015. New startup businesses are accounting for the greatest number of new jobs created (59,952, 42.9%). Startups accounted for even a greater share in 2010. New businesses moving into the region accounted for only 1,527 new jobs (1.1%) in 2015. I will have comparable data on Ashtabula County about 3 weeks from now.

Wall Street Journal: In Uncertain Times, CEOs Lose Faith in Forecasts;

The forecast for business predictions these days is cloudy.

Chief executives tap consultants, expert prognostications and polls about market and political conditions to help inform business decisions. But from the Brexit surprise to the rise of Donald Trump and the frequently revised U.S. job market numbers, expert analyses have been landing far off the mark–and executives are growing wary.

Uncertainty has been a given for business since the financial crisis, but business leaders say recent events have diminished their faith in forecasts. Some are tapping new data sources to guide decisions and spending, while others say they have resolved to keep operations flexible to prepare for sudden changes. A few corporate leaders say they are rethinking how much expert forecasting they are willing to pay for.

“The so-called experts and global economists are proven as often to be wrong as right these days,” says Scott Wine, chief executive of Polaris Industries Inc., a Medina, Minn., manufacturer of off-road vehicles and motorcycles.

Following Britain’s surprise decision last month to exit the European Union, Mr. Wine plans to lean heavily on his global workforce and customers for insights about local political sentiments and the investment climate. “We have not made a practice to gauge our employees about geopolitical risk. But it’s something we will do going forward,” he says.

Ken Lamneck, CEO of Tempe, Ariz.-based Insight Enterprises Inc., which sells information-technology products to companies, says he has become more cautious when sizing up predictions. He cites forecasts for currency fluctuations, where “analysts were pretty far off” recently, resulting in dampened revenue expectations. He has begun turning to fellow tech-industry CEOs for advice.

Mr. Lamneck also spends more time looking backward, comparing past forecasts with what actually happened. He uses that margin of error to assess new data, such as the predicted growth rate for his industry. Sometimes, that means Insight might invest less in, say, hiring salespeople, than a rosy forecast might warrant.

Mr. Lamneck says he is more closely scrutinizing the research that the company buys from advisory firms like International Data Group and Gartner. “We’ll look at, ‘What’s the real value of these services that we’re paying for?'” he says, adding that the reports are more useful for strategy ideas than for market-growth forecasts.

A study of about 28,000 expert geopolitical predictions over 20 years found that most were only slightly better than chance, especially when predicting events more than a year off would or wouldn’t happen, according to Philip Tetlock, a professor at University of Pennsylvania’s Wharton School of Business who studies forecasting.

Dr. Tetlock suggests businesses carefully track both internal and external forecasts and keep score on who gets the important calls right–a step that few companies take.

“If you can’t make an accurate forecast, who do you hold accountable for results? It bedevils managers and investors,” says Eric Ries, a management consultant who helps startups and established firms like General Electric Co. navigate uncertainty.

Mr. Ries advises his clients to rely less on forecasts and instead road-test ideas with customers and make fast adjustments when needed. He urges them to supplement big-data predictions with close observation of their customers.

Rupert Duchesne, chief executive of Aimia Inc, a marketing and loyalty analytics company, uses scenario planning to prepare for an unlikely, yet influential event.

Last month, he had an Aimia team spend several weeks preparing for the possibility of a British break with the EU and a plunging pound. “Because we had prepared, we were able to say clearly what the impact would be on our business,” he says. Soon after the vote results were tallied, Aimia, which has business interests in the U.K, announced that the pound’s decline would unlikely have a material effect on its business near term.

Such planning requires considerable time and resources, Mr. Duchesne acknowledges. He says one scenario-planning exercise several years ago cost about $10 million, an amount which included a plan’s eventual execution; it modeled possible outcomes of a business negotiation. Those costs help insure the company against surprises, he says.

A painful experience with a prediction gone wrong taught Robert S. “Steve” Miller, chief executive of auto-interiors manufacturer International Automotive Components Group and a veteran turnaround specialist, to favor flexible business models.

In 2008, Mr. Miller was executive chairman of Delphi Corp., the largest U.S. auto-parts maker. Few experts predicted the severity of the economic downturn that year, which caught Delphi and countless other companies unprepared.

The manufacturer, which had sought bankruptcy-court protection in 2005 shortly after Mr. Miller joined as CEO, came perilously close to liquidation as auto sales plunged. Delphi’s inability to predict the downturn “greatly extended the time we spent in bankruptcy,” Mr. Miller recalls.

During bankruptcy, he slashed Delphi’s hourly work force, cut 40% of salaried staff and closed 21 of the 29 U.S. factories. Delphi emerged from bankruptcy in 2009.

Mr. Miller now relies on a fluid manufacturing process at IAC. The company can easily move manufacturing equipment to a different location when automakers’ sales volume shrinks, he says.

He and fellow directors review corporate strategy quarterly, and Brexit’s effect will be on the agenda for their July 27 review. Mr. Miller says the referendum’s result will only add to the complexity his company faces.

Still stung from his experience in 2008, the IAC leader says he places little stock in current economic predictions. He is equally skeptical about predictions describing future effects of the Brexit vote.

“You always have to take this stuff with a grain of salt,” Mr. Miller suggests. “You can’t run your business with only one track in mind–which is the direction that forecasters and experts are telling you it will go.”

Source: Wall Street Journal, July 13, 2016

How families protect the financial health of cities

The growing financial insecurities of families around the globe have been fast becoming a chronic issue for many communities. As the cost of living continues to surpass minimum wage, tuition fees steadily rising and contract employment is becoming the norm, many families have little to no savings in case of an emergency.

According to the Federal Reserve Board, 47 per cent of Americans wouldn’t be able to come up with $400 in the event of a financial emergency.

Canadians aren’t fairing any better either. A 2015 survey by the Canadian Payroll Association found that almost half of Canadians polled admitted living paycheque to paycheque and would find it very difficult to make ends meet in the event of any income disruption.

The Urban Institute weighs in on the debate, urging cities to care more about the financial securities of the families that live within their communities, since loss of income could mean reduced revenue for the city and higher numbers of families seeking aid.

The solution? According to the Urban Institute, cities need to encourage families of all income levels to save more. Research found that savings play a larger role than income. A lower-income family with modest savings will fair better during a financial disruption than a middle-class family living paycheque to paycheque.

The Urban Institute’s research found that cities could protect their own financial health by encouraging families to save more through workforce development programs, affordable housing developments and by offering one-on-one financial coaching. Businesses can also help employees by offering automatic retirement deductions from paychecks.

When families are given the opportunity to pay themselves more, communities can only benefit.

Source.

Agri-tourism

From IEDC.

Like many agribusiness entrepreneurs, Shana Slossberg and Joe Amsterdam sell their products at farmers markets far and wide. But the Central Pennsylvania couple could do even more business if their customers came to them. That’s why the Perry County Economic Development Authority is turning to agritourism to grow its predominately rural economy (Penn Live).

It’s a strategy being pursued by many jurisdictions whose economies heavily rely on agriculture. As North Carolina farmer Cheryl Ferguson puts it, “We don’t have the industry. We have beauty, natural beauty in this county” (TWC News).

Marketing is a central element to selling tourists on a particular locality. One of the most successful agritourism promoters is Fields of Gold, which markets Virginia’s Shenandoah Valley farm trail. Its website hosts an interactive map which pinpoints locations of farmers markets, wineries and breweries, fishing locations, and more. According to consultancy Chmura Economics and Analytics, agribusiness in the Shenandoah Valley had aneconomic impact of $34 million in 2011 (Northern Virginia Daily).

Another heavyweight is North Carolina, whose agritourism sector had an income of $17.6 million in 2012. One way the state supports this sector is with the North Carolina Tobacco Trust Fund Commission, which recently provided three-to-one grant matching for state farms to ramp up their marketing activities (N.C. Cooperative Extension).