Economic Success Depends on Getting the Basics Right

To continue with yesterday’s theme of human capital and entrepreneurship, we’ll follow up with some comments made to Leadership Memphis last week by Portland economist Joe Cortright.

“What you tend to see in economic development is that it is very much faddish,” he said.  “Every one wants to be a Silicon Valley.  Then e-commerce.  Now everyone wants to be biotech.  But not everyone can be an expert in everything.  Following the fad is not good enough, because Memphis needs to build on its distinctiveness.  Focus on the basics and weave distinctiveness into it and be honest about your strengths and weaknesses. “

A pitfall in economic development circles is that there is a tendency to believe their own boosterism, he said.  “They believe their own ads when they need to be ruthlessly honest with themselves.”

Competing for the Right Jobs

Echoing the words of Ed Glaeser (as reported in yesterday’s post), smart economic development strategy focuses on entrepreneurs.  “What is your entrepreneurial tradition and what are the stories you can tell?” he said.  “But resist the urge to just say, ‘me too.’”

25-34 year-old college-educated people are choosing the place to live, smart people are moving to where smart people already are.  It’s a challenge for cities like Memphis, particularly because once the protracted recession ends, our difficulty in finding talented people will heighten.

Our colleague Carol Coletta, president/CEO of CEOs for Cities in Chicago, warned that five of the 10 fastest growing jobs in the U.S. don’t pay a living wage.  “There are a lot of good things going on in Memphis but the trajectory is not pretty,” she said. “And it’s not just Memphis.  It’s the metro numbers that are troubling.  Anybody who thinks we’re not in this together is wrong.  There is no way to get away from the problem by moving to North Mississippi or Fayette County.

“Every city has problems.  Almost every city has confidence problems.  The question is what are we willing to do, are we willing to tackle them with energy and are we willing to do it together.  Most of all, are we working on the right things?  Point in the direction where the payoff is the greatest.”

Core Values

Cities often underappreciate the value of the core city although research shows that areas with strong cores are holding their real estate values more than other cities.

Creative workers are 53% more likely to live within three miles of the center city, and their decisions on where to live and work are about quality of place.  “For a long time in economic development, it focused on jobs,” Ms. Coletta said. “Now it’s about quality of place.”

From 2005-2007, 1,600 25-34 year-old college-educated people moved out of the Memphis metro, and the rate is now 4% a year.  “In other words, to win, we need to be extra special good, and that’s not going to be easy,” she said.

The Payoff

Talent retention is about quality of place, quality of opportunity and quality of voice, meaning “putting good news into the marketplace but it must be believable.”  “Among ourselves, we need to understand the facts, the brutal facts, because we can’t kid ourselves.  We have to be honest among ourselves.”

In that way, a city’s percentage of college-educated people has never been more important.  “Three-fourths of the workers fired over the last year were let go on a permanent, not temporary, basis,” she said.  “Success today is about preparing ourselves for our next job.”

Unemployment rates underscore the importance of college education – 15.5% of people with less than a high school degree are unemployed; 11.2% of high school graduates; 9% of people with some college, but only 4.7% of college-educated workers.

Get Smart

In a theme that emerged as the thread for Leadership Memphis last week, Ms. Coletta spotlighted the importance of entrepreneurs.  “Remember that entrepreneurship peaks at 30 years old,” she said.  “Talent is not just about potential employees.  It’s about potential employers.”

And more and more, good urbanism is the foundation for attracting and retaining these talented people –  mixed-use, density, walkable and bikable neighborhoods and quality transit.  In other words, land use matters, and Memphis needs to get smarter about policies to combat urban sprawl that increases the costs of services, exacerbate economic segregation and create unsustainable development patterns.