Equitable Economic Development:
Examples From The Field
September 23rd 2006
Presentation for the National Resource Center for the Healing of Racism
Calhoun County Summit On The Healing of Racism
Denis Rhoden Jr.
Associate
Kirwan Institute for the Study of Race and Ethnicity
The Ohio State University
http://www.kirwaninstitute.org/
rhoden.8@osu.edu
Today’s Presentation
►A
Dynamic, Global Economic Landscape
► Equity and the Economic Development
Process
► Equitable Economic Development Initiatives
Across the Country
► The Regional Significance of the Inner City
► Calhoun County Collaborative Advantage
► Pulling It all Together
2
The American Worker Paradox
►
►
American workers now produce over
30% more each hour they work than
ten years ago, yet the wages of the
typical American worker—the one at
the very middle of the income
distribution—have risen less than 1%
since 2000.
The typical worker earns only 10%
more in real terms (adjusted for
inflation) than 25 years ago, even
though overall productivity has risen
much faster.
Source: Economist “Inequality in America: The rich, the poor and the growing gap between them.”
June 15th 2006.
3
Our Charge
► Domestically
the response to the global
interdependent economy has been episodic
and reactive; reflecting a failure to accept
the changing competitive landscape.
► Federal Reserve Chair, Ben Bernanke,
recently urged local political leaders to
seriously acknowledge the “costs of
globalization,” and “help their constituents
come to terms with them.”
Source: Andrews L Edmund “Fed Chief Sees Faster Pace for Globalization” New York Times August 25, 2006
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Reducing Volatility; Inclusion & Integration
► We
are challenged at every level, to be
more inclusive and integrated
 Bernanke’s comments encourage policymakers
to pursue strategies that meet two conditions:
►1.
“The benefits of global economic integration are
sufficiently widely shared,” and
►2. “Displaced workers get the necessary training to
take advantage of new opportunities.”
Source: Andrews L Edmund “Fed Chief Sees Faster Pace for Globalization” New York Times August 25, 2006.
5
A Unified Response
►
Action is being taken in regions throughout the country to
implement policy that promotes collaboration to generate
productive needed to adapt to changing conditions and
global economic hierarchies
►
Broadly, we need to define what the future should
look like with our collective imagination

►
A New Paradigm! : Targeted Universalism
What is our alternative vision?



A model where we all grow together
A model where we embrace collective solutions
This vision requires collective action and will require
coalitions to be successful
6
A Framework For Disparity
Historically
Biased
Structures
Today
What is occurring here to
replicate the outcomes today?
De Jure
Neutral
Structures
Biology
Disparate
Outcomes
Individuals/ Structures/
Culture Opportunity
Disparate
Outcomes
7
Policy Mismatch?
Economic Development Is
Not Simply Incentives–It
is Public Policy Aimed at
Crafting Place Level
Advantage. Who Chooses
What to Invest in?
CONDITIONS
ECONOMIC
DEVELOPMENT POLICY
REGULATION
/ LEGISLATION
PROGRAMS
/ PROCESSES
8
The Web of Opportunity
► Opportunities
in our society are geographically
dispersed or clustered
 This distribution is the basis for our understanding of
a “good” or “bad” neighborhood - - “high” and “low”
opportunity communities
► Your
location within this “web of opportunity”
plays a definitive role in life potential and
outcomes
 Individual characteristics still matter but the
environment plays a systematic role
► Often
impacting individual decision making
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Opportunity Is Dynamic & Layered
Health
Childcare
Employment
Housing
Effective
Education
Participation
Transportation
10
Capturing Equitable Economic
Development
► Equitable
economic development is a policy
strategy focused on correcting policy
mismatch from the perspective of
distribution and access to opportunity.
 In particular establish regional the economic
and equity case for areas (e.g. neighborhoods,
cities, counties) and groups (e.g. African
American, rural) disconnected from opportunity.
11
Why Equitable Economic
Development?
►
Equitable outcomes in economic development are
equally concerned with the ability to access and the
presence of opportunities
 Households, businesses and individuals are being challenged
to create local opportunities within a structure that does not
that purposefully impacts the fluidity of assets and capital.
► Practices
such as poaching in economic development are the
unintended consequence of mismatches in a web of policy
impacting the fitness and productivity of assets.
12
Our Response
► Geographic
differences in the ability to put
assets to work because capital does not
impact the same assets the same way
across space.
Largely episodic and fragmented
 Easier access to credit
 Tax Incentives
 Many More
► Where
is the systematic broader policy change to
revive unproductive assets and inspire enterprise
and innovation?
13
Policy Mismatches Prevail To Date
► Regions
that are the most fragmented are more
economically depressed. Why?
 No unified strategy for economic development
(infighting over jobs and new businesses)
 A less qualified and educated work force due to
educational disparities in the region
 Entry level and low skill work force spatially
isolated from suburban job opportunities
 More likely to exhibit sprawling growth that
wastes public resources on new roads, sewers,
schools in undeveloped areas, while existing
resources are left to deteriorate
14
Noted Concerns of Existing Paradigm
► Hyper
Competitive Policy Structure:
 ‘Zero-sum game’: A gain is offset by another
group’s loss
►Jobs
traveling across taxable boundaries
►Inefficient use of subsidy to meet concerns within a
typically short political life-span
 Very few incentive programs allow for broader
wealth redistribution to reduce inequity
15
Narrow Focus Masks Opportunities
► Static
Policy Mechanisms and Underutilized
Integrated Solutions
 Policy reflects perspective. Many policies are narrowly
defined (e.g. Eco. Dev’s Attraction, Retention,
Expansion). Few policy integrations to address the
factors impacting opportunity.
► The
result is competency and competitive disparities between
residents captured by neighborhood boundaries.
 Economic development professionals have limited tools
to provide comprehensive incentives
► At
worse forced to compete across jurisdictions (suburban,
urban), at minimum inefficient or under leveraged use of public
investment dollars.
16
Poor Spatial and Racial Distribution
Weakens Collaborative Advantage
► Not
seriously addressing the geographic (and
racial) outcomes
 The most isolated geographies–inner city, rural and firstring suburbs face similar decline yet few policy solutions
exist to reduce problems from common sources, (e.g.
land use management, infrastructure investment,
education).
► Joblessness,
poor education are among the factors
resulting in economic and social isolation limit
meaningful interactions and sustain negative
stereotypes across groups and places.
17
Regional Economic Health
►
►
Sprawl and fragmentation harm all residents of a region:
inner-city, suburbs & exurbs
Equity-based regionalism can positively impact a region’s
economic health
 Research suggests regions who utilize regional policies are
economically (and socially) healthier
 Outside of the West, there is only modest local action in developing
incentive-based affordable housing programs. Nearly two-thirds of
the municipalities have incentive programs and half have dedicated
funds established. No other region comes close to these figures
Source: Pendall et al (2006). Traditional to Reformed: A Review of the Land Use Regulations in the Nation’s 50 largest Metropolitan Areas.
Brookings Institution
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Equitable Economic Development
In Practice
Stakeholders and
Policymakers focused
on these areas…
Equitable Economic
Development
Practice Areas
Industry-focused
workforce
development
MBE/SBD
development
Leveraging and
distributing resources
& investments
Neighborhood
development
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Equitable and Productive Policy
► Concern
about fairness,
 BURA Predatory Loan Program
► encouraging
productivity in the core, and
 Land Value Taxation (Pittsburgh and Harrisburg)
► Integration
for equitable opportunity distribution
 Multiple partners and policy infrastructure connections
integrating economic and workforce development policy
(i.e. WIRED)
20
Equitable Economic Development is
Multi-Faceted and Interdependent
►
Tax Based Sharing Plans
(Twin Cities)
►
Fair Share Housing Laws
(Montgomery County)
►
Metropolitan-Wide School Districting
(Charlotte-Mecklenburg)
►
Anti-Sprawl Initiatives
(Portland)
►
Regional Public Transportation
(Indiana Interfaith Group)
21
Staking Claim: East Baltimore
► Scale
varies; but the interventions are leading to
more equitable results.
 In Baltimore, neighborhood economic development
resulted in an 80-acre, $800 million neighborhood
redevelopment over an 8-10 year period
► 1,200
Housing Units (new and rehabilitated, homeownership
and rental)
► new retail facilities; a set of supportive services
► and community building activities
► up to 6,000 new jobs will be created for skill levels ranging from
high school to those with advanced college degrees
22
Local Interventions
►
Layers of Policy Infrastructure
 City Ordinance
 Economic Inclusion Plan
►
Cross-Sector Partners





►
Anne E. Casey
Johns Hopkins Hospital (located in neighborhood)
Private Developers
Planners
Community Development Corporation
Implementation
 Local compliance & administration (East Baltimore Development
Inc.)
23
Level of Greater Impact
► Regional
interventions aimed at increased
productivity, equity-aware
 In the Northwest North Carolina corridor
(includes Greensboro and Winston Salem, NC
regions).
►Conducted CEDS funded by Dept. of Labor
 Brought together region’s eight counties to create a unified
economic development strategy
 Reconnected former manufacturing employees into the
‘design’ industry through educational interventions
increasing worker preparedness for employment in the field
24
Regional Interventions
► CEDS
planning process occurred county to county,
local leaders in each county leveraged resident
awareness to pursue good ideas while they were
fresh
 Among the themes which emerged was to take
aggressive steps to reduce social disparity. Their
research revealed, as disparity decreases, the potential
to attract new investment increased
► Receiving
additional federal funding from DOL to
pursue policies aimed at linking workforce
investment and economic development
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Business Accelerator
► The
Cincinnati region is about 43 percent
African American, yet African American
enterprises account for only two percent of
the aggregate revenue
 The Minority Business Accelerator approach is to
deliver more sizable and scalable MBE’s to the
market place (supply-side) as well as create a
more aggressive and robust corporate MBE
procurement environment (demand-side).
26
MBA Outcomes
► Minority
Business Accelerator provides an example
of a privately-led, regionally and racially aware
economic development intervention.
 MBA does maintain connections with academic
institutions; in particular the University of Cincinnati and
University of North Kentucky
 The Cincinnati MBA generated $200 million dollars in
commitments from 15 companies regionally located or
headquartered in Cincinnati
 Responsibility of tracking and reporting remain a high
priority to the MBA and its corporate partners. Reporting
is completed through a confidential process, verified
directly by partner CEOs
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Community Benefit Agreements
► Emerging
economic inclusion tools for
property development by real estate
developers and coalitions of community
organizations
► CBAs have been effective against limiting
potential negative externalities which can
further destabilize neighborhoods
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CBA Create Value & Capacity
►
Past CBAs have been successful in negotiating the
following investments in residents and neighborhoods
 a living wage requirement for workers employed in the
development;
 a “first source” hiring system, to target job opportunities in the
development to residents of low income neighborhoods;
 space for a neighborhood-serving childcare center;
environmentally-beneficial changes in major airport operations;
 construction of parks and recreational facilities;
 community input in selection of tenants of the development; and
 construction of affordable housing
►
CBAs are a market based, community oriented
development tool: they do not require a legislative process
and provides the basis to develop legislation that supports
broad applications based on performance
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Stakeholders in Action
► To
recap, Equitable Economic Development
interventions utilize policies that address inequity
in a variety of ways.








Private Equity
Land Use
Worker Preparedness
Institutional Grants
Infrastructure
Advocacy
Compliance
Business Accelerators
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Place and Life Outcomes
► Equitable
Economic Development is broad,
integrated and its interventions intend to enhance
and distribute prosperity and reduce barriers to
capital for households and businesses…
 Housing location determines the quality of schools children
attend, the quality of public services, access to employment
and transportation, health risks, access to health care and
public safety
 Greater access to risk capital (dynamic policy infrastructure
and an active network of deal and policy makers) to reduce
friction-barriers and increase productivity.
31
America’s Inner City in Context
► Between
1990-2000 grew to 21M residents from
17M (or 24%)
 Poverty in the inner city declined to 31% from 35%
during the same period.
► Much
of the reduction can be attributed to the movement of
poverty outside of the inner city.
► Inner
city economies in the 100 largest cities are a
substantial portion of the U.S. economy
 8% of U.S. private employment (9 million);
 814,000 establishments
Source: ICIC “SOICE Teleconvening Presentation” February, 2005
32
Regional Productivity & the Inner City
While some inner cities are doing well in terms of employment
growth, 90 out of 100 are under-performing their MSAs. With a
wide range of performance, on average inner cities generated
1% annual job growth (vs. 3.4% for the MSA – exclusive of IC.)
► Inner city/MSA income gap is 50% ($25K vs. $52K), wage gap is
0% (both at $38K).
► 77% of jobs in IC are not held by IC residents (42% are
suburban ’commuters’ and 35% are from the rest of the city).
►
Source: ICIC “SOICE Teleconvening Presentation” February, 2005
Notes: Figures above are for the nation’s 100 largest inner cities
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Jobs & the Inner City
►
Inner cities gained jobs in the 1990s but lagged behind the rest of
the U.S.:
 Job growth in inner cities grew at an average annual growth rate of 0.8% from
1995-2001, but this lagged behind the rest of the city and MSA (2.1% and 3.7%
respectively); Sixty-one inner cities gained jobs between 1995-2001. Of these 21
grew faster than the rest of their cities. Six grew faster than the rest of their
metropolitan areas, including Tulsa, San Jose, Boston, Winston-Salem, Charlotte,
Augusta
 The average salary of jobs located in the inner city is $38,500, compared to
$41,000 in the rest of the city and $35,000 in the rest of the metropolitan area. But
inner city residents do not hold the higher paying jobs—inner city residents are only
half as likely to hold professional positions as rest of city and rest of metropolitan
area residents: 22% of inner city residents are professionals, vs. 41% of rest of
central city residents, and 37% of rest of metropolitan area residents;
 In 2001, at the onset of the economic downturn, inner cities experienced a 0.2%
decline in business employment. Employment in the rest of city and the rest of
metropolitan area continued to grow at 2.4% and 0.3% respectively.
Source: ICIC, “State of Inner City Economies, 2004
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Inner City Competitiveness Drivers
Source: Initiative for a Competitive Inner City
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Collaborative Advantage in Calhoun County
►
Concerned with the creation of meaningful synergies
between organizations resulting in networking,
coordination, cooperation, and collaboration.
 Collaboration is “information exchange, altering activities, sharing
resources, and enhancing the capacity of another for mutual
benefit and to achieve a common purpose.”
►
►
What Calhoun County institutional assets can be leveraged
to create collaborative advantage?
What would you organize around to effectively use the
newfound synergies?
Source: Diebold et al. (2000) “Building an Intervention: A Theoretical and Practical Infrastructure for Planning, Implementing, and Evaluating a
Metropolitan-Wide School-To-Career Initiative” Journal Of Educational and Psychological Consultation Vol. 11 Issue 1 pp 159
36
Metropolitan Economy
► Between
2000 and 2003, the Battle CreekKalamazoo, MI metropolitan area lost nearly
8700 jobs (an average of nearly 2900 per
year).
 15% of the African American population (nearly
6,000 people) left the region from 2002 to
2004.
Source: U.S. Census Bureau, American Community Survey
37
Poverty: A Multi-racial challenge
►
Calhoun County poverty suffers the same
challenges found around the U.S. (15,000 in
poverty or 11% of the total population)
 African Americans are over represented; 2x
more likely to be in poverty than Whites (23%
versus 9%)
 However, there are substantially more Whites in
poverty than any other group (10,000 Whites
compared to 3,000 Blacks)
38
Calhoun Collaborative Advantage
►
Agency policy integration of Workforce and Economic
Development (State to Local)




State of Michigan Office of Labor and Economic Growth
Barry / Branch / Calhoun County Workforce Development Board
Calhoun County Economic Development Council
Calhoun County Area Technical Center
► WIA
Youth Program
 Calhoun County Intermediate School District
► Career Preparation
► Michigan Works! Workforce
Development Team
 Innovating Private Partners (Pharmacia & Upjohn Company, Eaton
Corporation, Stryker Corporation, Dana Corporation, Kellogg
Company)
►
Identify economic intersections to create policy goals and
tools from the Calhoun perspective.
39
Reviving Dead Capital
► Informal
sources of risk capital are critical
for entrepreneurial and start-ups.
 What is informal risk capital?
►In
2003, a major source of risk capital, household
wealth represented over $325 Billion dollars to
households (about $9,084 for every owner-occupied
home in the nation)
►By directly addressing how land use creates wealth
for some opportunities can be created for all.
Source: Parisi, Michael and Hollenbeck, Scott. (2005) “Individual Income Tax Returns, 2003” Statistics of Income Bulletin. Fall 2005
Vol. 25 Issue 2
40
Capital Formation is a Housing Issue
► Calhoun
County account for 1/6 of 1 percent
of the federal mortgage credits (approx)
$491M in 2003
Nearly eighty percent of the owner-occupied units
are White, with potential to access approximately
$322M.
►In contrast, Black householders had about $27M in
potential funds that could be invested in enterprise
(12 times less than Whites)
►
 Exactly the difference in homeownership between Blacks
and Whites in Calhoun County.
 Although the credit is not ‘cash,’ much like home value
represents capital that can be put to work.
Source: DataPlace, U.S. Census Bureau, Parisi, Michael and Hollenbeck, Scott. (2005) “Individual
Income Tax Returns, 2003” Statistics of Income Bulletin. Fall 2005 Vol. 25 Issue 2
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Regional Assets, Equity Focus
►
►
Isolation comes in many forms. Urban Calhoun is not being
infused with private capital and investment at the same
rate as peripheral communities.
Evidence suggests however, the strongest regions look to
the core as a source of jobs, capital and innovation. The
lack of urban investment has a powerful and negative
effect on the vitality of the entire region.
 Private capital ability to reach under productive assets is
imperative to creating strong regions and efficient markets
► Examples:
Affordable owner-occupied housing, expansion of CEDC
role, EBDI (integration among public and private intermediaries)
42
The Need to Think
in Terms of Opportunity
►
A disparity model is a less-than-sufficient framework for stimulating
collaborative advantage and broader solutions to lift all groups out of
weak economic conditions
 In the global market, it is less relevant for us as a nation to view the White
experience as THE benchmark of prosperity, because we are all losing
ground.
►
“Opportunity structures” are the resources and services that contribute
to stability and advancement
►
Fair access to opportunity structures is limited by segregation,
concentration of poverty, fragmentation, and sprawl in our regions –
for low-income households and families of color
►
Because opportunity structures exist as a “web” a multi-faceted,
equity-grounded approach is needed
43
Linked Fate
► Why
should those living in inner-ring, outerring suburbs, and exurbs care about innercity disparities?
 A region and all its residents share a linked fate
 This issue is particularly important today
►To thrive, regions must be competitive in the
global economy
►Regions cannot compete with
wasteful and redundant services,
and fragmented governments
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Questions or Comments?
For More Information Visit Us On-Line:
www.KirwanInstitute.org
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