Month: November 2016

IEDC: Is the skills gap an illusion?

Educators are failing students because they aren’t training them in the skills needed to fill open jobs: This is the commonly accepted narrative surrounding the “skills gap,” and the explanation for why companies are slow to hire even though plenty are looking for work. The Pew Charitable Trusts has taken a microscope to the issue of slow hiring in the United States in a three-part series called “Help Wanted: Why Willing Workers Aren’t Filling Open Jobs.” The skills gap is dissected in part one, challenging the idea that more training is the solution to employers’ hiring woes. Several alternate explanations are put forward:

1. Employers are too picky: Some are holding out for a fully trained worker with previous experience in a similar positions (but employers are unwilling or unable to pay enough to secure these individuals).

2. Many vacant jobs are not “good jobs:” Sometimes they are in rural areas or have undesirable shifts.

3. Some jobs don’t pay enough: Additionally, employers don’t always realize their wages are low. As the article notes, “Only 22 percent of employers surveyed by Utah’s Department of Workforce Services last year named low wages as a hiring problem, but 68 percent of those employers were offering below average wages.”

4. Decline of unions: Unions traditionally negotiated pay and conducted skills training, but their stature and membership has dwindled in recent decades.

5. An unwillingness to consider candidates with a criminal record or inability to pass a drug test: Although some employers would like to hire these individuals, liability concerns with their insurance providers prevent them from doing so (Wall Street Journal).

Here are some of my own thoughts on this issue. We assume that business owners and managers know what’s best for their businesses. That is not always the case. Many businesses are strategy-less. Many businesses do not have a human resource strategy, or their strategy is to make as much money as possible on the backs of the workers. Many employers do an inadequate job of developing and managing human resources.  Smart employers have adopted business models that are human resource-driven. It’s all about talent, innovation, and productivity in the future. It’s not about simple low-paying jobs.

Columbus approves $150,000 to study economic-development incentives

Columbus plans to take a closer look at the incentives that it offers developers.

The City Council approved spending $150,000 on a contract with firm HR&A Advisors of New York on Monday night to analyze its tax-incentive offerings and to potentially offer suggestions for changes.

“It’s a prioirty to invest tax dollars in a way that leverages smart and sustainable growth as we see that kind of population growth in our city while also protecting public funds,” Councilwoman Elizabeth Brown said.

The analysis will look at how competitive Columbus is with other cities; how incentives affect development patterns; and whether the city should be offering different types of incentives. It will take up to six months to complete, said Steve Schoeny, the city’s economic-development director.

Tax incentives are to blame in part for flattening property tax revenue in recent years, said Hugh Dorrian, city auditor. Dorrian said property-tax revenue has bounced up and down about $500,000 a year over the past several years, but it hasn’t jumped significantly even as the city has grown.

In 2012, the city collected about $44.3 million in property taxes — about $900,000 more than what it will take in this year, Dorrian said. Next year, he’s expecting that to tick up to about $45 million.

“I don’t think there’s any question that one of the reasons these property taxes have been flat is because so much property has been exempted,” Dorrian said. “Tax incentives anymore, I think, have kind of reached the pinnacle of their usefulness. That is largely because of the competition among cities.”

Schoeny said the analysis will look at how the city competes with neighboring cities along with others around the country.

The study will include incentives for both residential and commercial tax incentives, he said.

Consultants will look at three or four Columbus neighborhoods to try to understand how incentives used there have affected them and how the city can get more value out of them. That could include, for example, encouraging environmentally friendly buildings and mixed-income development.

The city generally uses property-tax abatements and tax-increment-financing districts, along with income-tax credits, to entice commercial development, Schoeny said.

Taxes are forgiven with a property tax abatement, but they are set aside to pay for nearby public infrastructure improvements in a tax-increment-financing district.

Schoeny said the analysis will tell the city more about what “levers to pull” to maximize what it is getting out of its incentives.

Also Monday night, the council approved spending about $5.4 million to buy 16 new garbage trucks. The city will buy four trucks each from four different contracts. It will evaluate which truck works best and purchase more on that contract in the future.

The city has 83 automated side-loader trucks for trash pickup, and it replaces about eight each year, said Jeff Ortega, assistant director in the Department of Public Service.

The truck purchases that council approved Monday will come from the 2015 and 2016 capital budgets. The new trucks will be powered by compressed natural gas.

“This is an opportunity to review how this is being done to see what the industry is suggesting in terms of the latest technology,” he said.

Ohio Supreme Court Rules Against Online Sales Taxes But for a Different Online Tax

Ohio can impose its commercial activity tax on out-of-state businesses lacking a bricks-and-mortar presence in the state, the Ohio Supreme Court ruled today.

In a 5-2 decision, the justices found that three online retailers were subject to the tax.

The state’s $500,000 annual sales threshold before the tax is imposed complies with the commerce clause, O’Neill wrote.

The tax has been collected since 2005 and brings in about $1.7 billion a year for the state.

The ruling came in cases in which Crutchfield Corp., Newegg Inc. and Mason Companies had appealed Board of Tax Appeals rulings that they owed commercial activity taxes which they had refused to pay based on their Ohio sales.

Crutchfield, based in Charlottesville, Virginia, sells electronics online while Newegg, of Whittier, California, also sells electronics and other items. Mason Companies, of Chippewa Falls, Wisconsin, sells a variety of items online.

In a dissenting opinion joined by Justice Judith Ann Lanzinger, Justice Sharon L. Kennedy wrote that a 1992 U.S. Supreme Court ruling a physical presence was required to tax out-of-state companies and that only the court or Congress can change law on taxing interstate commerce.

Ohio Department of Taxation spokesman Gary Gudmundson said there is no estimate on the number of out-of-state businesses that have refused to pay the commercial activity tax and what they owe.

A number of online retailers have been paying the tax since its inception while others have declined while awaiting a legal decision, he said.

In Crutchfield’s case, the company was billed about $207,000 in taxes and non-payment penalties from mid-2005 through mid-2012. Newegg owed $447,580 for 2005 through 2009.

In a statement, Tax Commissioner Joseph Testa said: “The Court’s decision recognizes Ohio’s legitimate interest in applying its singular general business tax evenhandedly on both in-state and out-of-state businesses.  It is reasonable that out-of-state businesses, who enjoy over $500,000 annually in gross receipts from Ohioans, should pay the CAT just as their Ohio peers do.”

CEOs are Feeling Confident

National business leaders responding to Chief Executive’s monthly CEO Confidence Index, which was distributed the day after the election, gave a much higher overall rating for how they feel business conditions will be 12 months from now this month than the month before. On a 1 to 10 scale, with 9-10 being excellent, and 1-2 being poor, CEOs gave a combined rating of 6.54. That’s a 10.8% jump over the 5.9 rating given in October, and it’s the highest rating given in more than a year. 

Learn more about this survey, as well as what CEOs are considering as top priorities for the federal government here

IEDC: What rural America needs to thrive: Five perspectives

By Eli Dile. IEDC

From the New York Times’ Room for Debate series, five experts give their takes on the strategies best suited to help rural America prosper. Their viewpoints are summarized below. What do you think – do they hit the mark?

Broadband and other infrastructure: “In struggling rural areas, there is a need for investment in the physical, natural and technological infrastructure that has been a critical building block for a better economy elsewhere. That entails laying broadband lines, restoring and reforesting degraded land, repairing parks, and renovating housing and building stock to make it more energy efficient.” – Jason Bailey, Kentucky Center for Economic Policy

Green energy: “Rural Americans are the stewards of our natural resources, from food to fuel, and they are on the front lines of a new economy that is rooted in cleaner and greener power production. Direct job creation in this sector would be a huge step forward in communities transitioning away from extractive industries like coal.” – Whitney Kimball Coe, Center for Rural Strategies

Balanced trade and subsidies: “Issuing a dollar’s worth of import licenses for every dollar of exports balances trade without restricting it. There are plenty of competitive American products to buy. We must also recognize that low-wage workers are high-cost workers. That’s why they are the first workers laid off in a recession and the last workers rehired. Don’t raise the minimum wage, which excludes the lowest-skilled workers. Subsidize low-wage employers, instead of vilifying them, to create more demand for low-skilled workers. Reconsider incentives that discourage work. And reduce restrictions on construction to lower the cost of housing.” – Edward Conard, American Enterprise Institute

Listening skills: “[M]any rural residents struggle with a broken local economy at the same time that they resent any government-oriented approach to fix it. Genuinely listening to people in rural America would not only help politicians craft better policy, but it could convey some of the sincerity necessary to overcome the rampant distrust of government that resides in many of our rural, overlooked places.” – Katherine Cramer, Morgridge Center for Public Service, University of Wisconsin-Madison

Reasons for optimism: “Rural populations have stabilized and are beginning to grow, the Agriculture Department reported earlier this year. Then we learned that rural counties had added more than 250,000 jobs in 2014 and 2015. As a result, the rural unemployment rate has dropped below 6 percent for the first time since 2007.” – Tom Vilsack, U.S. Department of Agriculture

ED Now Feature: When Town and Gown Make Ideal Redevelopment Partners

By David J. Robinson, the Montrose Group and Wilson Kerr, the Ohio State University

Located just outside of Toledo, Bowling Green, Ohio, is a traditional college town. Bowling Green is home to 31,000 residents, 20,000 of whom are students, faculty, and staff at Bowling Green State University (BGSU). The university’s presence offers opportunities and challenges for economic development, as they do in most college towns. A collaborative development project between the city and the university offers an interesting model of a town-gown relationship that achieves bigger and better economic development goals.

Bowling Green has many assets. Forty percent of residents have a bachelor’s or professional degree, and the county’s median family income is above the Ohio average. It is located directly on the I-75 corridor, which runs from Detroit to Florida and connects the U.S. auto industry with growing southern markets. And of course, the university is a huge asset, as a source of technology commercialization, industry-based research, major academic and sporting events, and a large population of students and staff that creates a heightened demand for commercial and retail development.

There are challenges, however, to development in Bowling Green. A substantially dense student population creates a concentration of retail and housing that is often of questionable quality. These challenges impact both the city and the university, hindering BGSU’s ability to recruit students and lowering the quality of life for the people who live there year-round.

Much of this aging retail and low-quality housing is concentrated along East Wooster Street, the campus’s gateway, directly off of I-75. When the Ohio Department of Transportation (ODOT) approved a $100 million third lane expansion on the section of I-75 running past the town, it gave Bowling Green the impetus to rethink the university’s “front door.” Next to the street’s off-ramp is vacant land primed for development. Bowling Green decided it was time to not only improve the off-ramp but also to improve the campus gateway and encourage industrial and technology business growth east of the freeway.

The City of Bowling Green, along with BGSU, jointly commissioned the East Wooster Street Corridor Study, a land use plan that outlined a $10 million highway off-ramp, streetscape and traffic improvements to completely change the look and feel of the gateway to the town and university. The city also solicited the Bowling Green Community Development Foundation (which leads the city’s economic development program) to partner on an economic development strategy to determine what companies could be located on both sides of the Wooster Street corridor. It also identified an infrastructure and tax incentive approach to make both the land use and economic development plans a reality. By combining their land use master plans, the City of Bowling Green and BGSU were able to cooperate on a plan that would serve both parties.

Impact on economic development

While BGSU is Wood County’s largest employer, trade, transportation, utilities, and manufacturing represent the largest share of the private-sector economy. Bowling Green determined that the vacant parcels east of the I-75 interchange have substantial development potential to attract high-wage, advanced manufacturing companies. The economic development strategy recommended maximizing the off-ramp investment at this strategic location by:

  • Adopting a tax-increment financing district to develop shovel-ready sites for advanced manufacturing facilities;
  • Considering the connection of a transportation improvement district over East Wooster Street and the I-75 interchange project; and
  • Marketing the sites to high-wage, advanced manufacturers that could leverage the highway access.

Impact on the university

Bowling Green’s economic development strategy acknowledges that Ohio’s higher education marketplace struggles to recruit 18-year-old students. Amenities such as quality, low-cost housing and a mix of millennial-friendly retail are important factors that influence where freshmen decide to enroll. Kent State University, the University of Toledo, the Ohio State University, and others have created similar campus gateway developments to improve entries to the schools.

The Bowling Green East Wooster Street Corridor Economic Development Strategy suggested a joint planning process to create a mixed-use and housing development connected to the campus through several critical steps:

  • Bowling Green, Bowling Green Community Development Foundation, and the university should work with the BGSU Foundation to develop a property assemblage plan on East Wooster Street;
  • A request for qualifications should be sent to private developers with experience in mixed-use and housing development near a university;
  • A TIF district should be created to fund infrastructure development, site development, and streetscaping on these sites; and
  • Bowling Green should invite local investors and developers to be a part of the property assemblage and mixed-use development.

Implementing Bowling Green’s land use plan and economic development strategy is a story in progress, and the project team is in the process of interviewing master developers to implement this vision. The project illustrates how partnerships and planning can maximize the benefits to both the university and the city. By collaborating on both studies, Bowling Green discovered a unique opportunity to simultaneously create high-wage manufacturing jobs and address critical redevelopment opportunities tied to attracting and retaining college students.

Personal View on the Presidential Election

Dear Ashtabula County Friends:

I believe it is fair to say that millions and millions of Americans were shocked at the results of the presidential election. Among them were the vast majority of political commentators, pollsters, and pundits, including those working for the Trump campaign. I can say that I was one of the shocked many.

To me, this points up how little we really know in today’s supposed knowledge-driven world. We truly live in an age of uncertainty–a time when data analytics, real-time information, and long respected theories fail to predict accurate outcomes. This is a time for wisdom; that is a time for seeking a deeper understanding of what lies inside us, and what drives us as human beings.

America has a new President. It will take all of us a while to ascertain what this development really means in terms of the economy, world relations, communities, families, and many other things. So much hinges on the decisions we make and the actions we take moving forward. We all know there is a huge difference between winning an election and giving leadership in a way that provides the best for a nation–a nation that is highly divided and in many respects has lost its way.

The People of America have shown their level of dissatisfaction with how things are in their world. They have voted for change, without understanding the real consequences of this change. The election of Donald Trump as President reflects the American People’s desire to lessen and transcend their pain and dissatisfaction.

We must work together to form a new image of America; an image that is visionary, yet honest, inclusive, affordable, and achievable. With that new image in mind, we must work toward rebuilding trust in ourselves and our great nation. We must become not only a greater nation but a more grateful nation. We must learn to do more with less, and we must commit ourselves to finding new common ground that brings peace and prosperity for all.

This has been an amazing presidential race, and one reminding us to forgive, overcome our differences while respecting them, and one pointing out the complexity of the world we live in.

God bless America and God bless each and every one of you reading this letter.

In gratitude to our nation and each of you.

Don Iannone
November 9, 2016

From IEDC: What rural America needs to thrive: Five perspectives

From the New York Times’ Room for Debate series, five experts give their takes on the strategies best suited to help rural America prosper. Their viewpoints are summarized below. What do you think – do they hit the mark?

Broadband and other infrastructure: “In struggling rural areas, there is a need for investment in the physical, natural and technological infrastructure that has been a critical building block for a better economy elsewhere. That entails laying broadband lines, restoring and reforesting degraded land, repairing parks, and renovating housing and building stock to make it more energy efficient.” – Jason Bailey, Kentucky Center for Economic Policy

Green energy: “Rural Americans are the stewards of our natural resources, from food to fuel, and they are on the front lines of a new economy that is rooted in cleaner and greener power production. Direct job creation in this sector would be a huge step forward in communities transitioning away from extractive industries like coal.” – Whitney Kimball Coe, Center for Rural Strategies

Balanced trade and subsidies: “Issuing a dollar’s worth of import licenses for every dollar of exports balances trade without restricting it. There are plenty of competitive American products to buy. We must also recognize that low-wage workers are high-cost workers. That’s why they are the first workers laid off in a recession and the last workers rehired. Don’t raise the minimum wage, which excludes the lowest-skilled workers. Subsidize low-wage employers, instead of vilifying them, to create more demand for low-skilled workers. Reconsider incentives that discourage work. And reduce restrictions on construction to lower the cost of housing.” – Edward Conard, American Enterprise Institute

Listening skills: “[M]any rural residents struggle with a broken local economy at the same time that they resent any government-oriented approach to fix it. Genuinely listening to people in rural America would not only help politicians craft better policy, but it could convey some of the sincerity necessary to overcome the rampant distrust of government that resides in many of our rural, overlooked places.” – Katherine Cramer, Morgridge Center for Public Service, University of Wisconsin-Madison

Reasons for optimism: “Rural populations have stabilized and are beginning to grow, the Agriculture Department reported earlier this year. Then we learned that rural counties had added more than 250,000 jobs in 2014 and 2015. As a result, the rural unemployment rate has dropped below 6 percent for the first time since 2007.” – Tom Vilsack, U.S. Department of Agriculture

From IEDC: Words of Wisdom from a Retiring Economic Developer (Maury Forman)

My Swan Song

By Maury Forman

It’s time!

After almost 26 years, five governors, eight directors, six department name changes and hundreds of workshops and presentations, the time has come to put away my three-legged stool theory of economic development. Yes, the rumors are true that at the end of this month, I am retiring.  I will feel like an alien from another planet, leaving the comforts of state government that has supported me for more than two decades and stepping off into the unknown that is retired life.

This blog shall serve as my swan song, which causes me concern, largely because I am neither swan-like nor can I sing. I’ll gladly blame the Greeks and all their mythology for this, of course. They considered the swan a symbol of beauty and harmony. As for the idea of the swan song itself, well, it is supposed to be a final gesture, the final number in a last performance.

Given its gravity, I thought long and hard about what to write in the first place. I could have done an In Memaury-am piece. But that seemed a bit self-serving. I also could have done a big thank you as my sendoff, thanking everyone who helped me throughout my economic development years. But I would not want this to sound like I just won the Academy Award for Best Performance in an Economic Development Role. My work at Commerce was rewarding but was it really award worthy? Anyway, I don’t want to embarrass Linda, Karen, Terry and Robb for making me the man I have become as a result of their guidance and partnerships over the years.

So, swan song it is.

After a lot of torment and several discarded drafts, I have finally decided that after 26 years I would bequeath a bit of wisdom for every year I was here. Unfortunately, I don’t have that much wisdom and without cartoons, who would read the entire list? Not me. So, in keeping with my love of Top 10 lists, here are 10 bits of wisdom that I will share with you.

1. Economic development is not about jobs. Economic Development is about strengthening communities so job creation can occur organically. If your board tells you that your position requires you to create ‘X’ number of jobs then they are setting you up for failure.

2. Rural matters. The economies of rural and urban parts of any state are interdependent.That economic dependence is real, measurable and significant. Rural manufacturing performance sends economic ripples into urban areas and agribusinesses generate additional business-to-business spending. Don’t short-sheet rural.

3. Every economic developer should have a working relationship with their library or at least a regional one. Libraries act as great “Third Places” in a community, more so than coffee houses. Baristas serve you coffee that will last for hours; librarians serve you knowledge and information that will last a lifetime and can help your community grow. That knowledge will help communities relocate a company, assist entrepreneurs in starting a business and provide strategic intelligence to existing businesses to understand their competition and the marketplace in general.

4. There is no #4. I came up a bit short in giving you 10 bits of wisdom so I stuck this in the middle hoping you wouldn’t notice.

5. The pathway to jobs is not through recruitment. Studies clearly show that small businesses are the true job generator in any community. Pay attention to them. Existing businesses can be like dogs. They are faithful to where they live, but if you don’t pet them every once in a while, it’s hard to keep them under the porch. It falls to practitioners to give them the support and assistance they need to grow. If you focus on small business growth and entrepreneurship, other businesses (recruitments) will naturally follow.

6. A healthy downtown will usually mean a healthy community. Suburban malls come and go but a downtown should last forever. Revitalize, re-grow, and reinvent. This will combat neglect, abuse and abandonment, which so many downtowns have experienced. A strong downtown can be a major stimulator for economic growth and potentially a key revenue generator for local government.

7. Educate your boards. It is as important for them to be educated in this profession as it is for the practitioner.  The International Economic Development Council has some excellent professional development opportunities throughout the United States. Not only is it important to educate your boards about today’s strategies and  best practices in economic development, but the private sector should have as much representation as the public sector in determining the direction of the community. Not only will they offer a unique perspective concerning your activities, they will also be your best brand ambassadors, drawing other businesses to your community.

8. Youth will form the backbone of the community for the next 50 years. If they have opportunities to learn new skills, participate in a business plan competition, appreciate the community’s assets, practice leadership, enter an internship program with existing businesses, and identify and become mentors, your community has a better chance to grow and prosper.

9. Washington State has some of the best community colleges in the country. They have greatly broadened their economic development role to include contract training, small business development and entrepreneurship. These new activities promise to take the community college in a new direction, from an institution focused on educating students to one centered on meeting the needs of businesses and the local economy. Community college is not just about scholarship. It is also about successful adulthood.

10. Every community should promote strategies that support the three-legged stool that encourage 1) asset development (infrastructure, arts and workforce programs), 2) innovation and entrepreneurship, and 3) technical assistance.

So there you have it. Ten bits of wisdom that I have left you with (O.K., nine if you really read them all).

As those of you who have heard me speak know all too well, I always like to conclude with a story. As such, I leave you with this swan story which has nothing to do with swans.

This is the story of a band of people marooned on an island and they want to get off. One day they spot a passing ship and quickly build a bonfire to attract its attention.  The captain of the ship sees the smoke and dispatches a dingy with a batch of the latest newspapers to the island so those marooned can determine if they really want to leave. After reading the newspapers, the people on the island decide they want to stay there and not return.

I am here to tell economic developers that you do not have that option. You must be totally engaged in the future of your community. You are in a position to positively affect the direction of your community and create a better place for the next generation of workers, families and residents. Your community is special. You have history, economic opportunity, neighbors who care about each other and a great quality of life. You believe in strategic thinking, new ideas and innovation, stimulating conversation, investing in your assets and you understand that economic development begins at home. And if aliens ever come from another planet and asked you to show them the best of America, you would bring them to your community.

Now that’s a recruitment that even I could support.

– Maury