State Economic Development Executives (SEDE) Network

Category: Blog Post

  • Brookings: Turning the data center boom into long-term, local prosperity

    The AI goldrush roars on. Hyperscalers like Google and artificial intelligence (AI) upstarts like OpenAI continue to pour massive sums into building gargantuan data centers, often in small- and medium-sized communities.

    As the deals proliferate, concerns are rising about the huge amounts of electricity and water required to keep the centers running. At the same time, pitched battles over zoning and permitting rules are pitting tech-firm developers against local land-use managers, especially in rural and exurban America.

    Yet beyond such infrastructure and resource concerns, sharp debates are also engulfing the facilities’ core economic proposition for communities. Local leaders are questioning the credibility of Big Tech’s promises of spillover effects that will produce high-quality economic development beyond near-term construction. What’s more, skeptics are wondering about the veracity of the developers’ assurances of a thrilling new era of “reindustrialization” across Main Street America.

    These debates raise fundamental questions: To what extent are the data center builders’ promises of economic development more than hype? And if these promises are more than hype, how can communities make sure these pledges translate into a durable local economic advantage?

    Continue reading here.

  • NCSL: Workforce Pell Is Coming. Are State Legislatures Ready?

    The Workforce Pell Grant launches July 1, 2026, giving states a formal role in federal student aid for the first time. States will identify and approve eligible short-term training programs (8-14 weeks, 150-599 clock hours) based on federal criteria: programs must prepare students for high-skill, high-wage, or in-demand jobs, confer stackable credentials toward degrees, and meet 70% completion rates, 70% job placement rates within 180 days, and an earnings value threshold where median graduate earnings above 150% of poverty exceed tuition costs three years post-completion. Governors and state workforce boards will review programs, and states may need to define terms like “in-demand” and “high-wage” while building data systems to track non-credit credential outcomes.

    The timeline is tight—final federal regulations won’t arrive until spring 2026, leaving states just months to submit approved program lists before the academic year begins. State legislatures should consider strengthening data infrastructure to connect postsecondary and workforce systems, aligning state definitions of eligibility terms with forthcoming federal rules, and examining how Workforce Pell interacts with existing state training programs. Students apply via FAFSA, with awards prorated by program length and counting against the 12-semester lifetime Pell cap. Programs that fail performance benchmarks lose funding until they demonstrate improvement and gain state reapproval.

    Read the full article here.

  • AMCC: 10 Questions SMEs Should Ask About Data Centers

    During a February 6, 2026 AMCC call, Dr. Deborah Stine provided an excellent discussion on data centers and advanced manufacturing.

    To view the presentation recording (her presentation begins at the 11:30 mark) and slides, click here.

    The American Manufacturing Communities Collaborative (AMCC) is designed to create and strengthen an alliance of communities with regional economic development initiatives underway dedicated to achieving sustainability through economic growth, improved environmental performance, and inclusive well-paid job creation supporting initiatives to create new opportunities and equity within a revitalized American manufacturing base.

    Read more here.

  • States Take Center Stage: Economic Development Under the One Big Beautiful Act

    Congress enacted the One Big Beautiful Act (OBBA) in July 2025 with clear implications for how states drive growth, competitiveness, and return on public investment. The law amends education and tax policy, but its effects extend well beyond those domains. OBBA tightens the connection between federal resources and state-defined economic outcomes. It places states at the center of validating demand, measuring results, and coordinating systems that shape regional growth.

    At its core, the Act reflects a shift in federal expectations. Federal benefits for credentials and training increasingly depend on earnings, employment, and demonstrated market relevance. For state economic development leaders, this creates an opening to rethink how workforce systems, higher education institutions, and federal place-based tools support broader state growth strategies.

    For states, the most consequential change is the elevation of the state’s role in directing investments in talent pipelines. The new Workforce Pell framework allows federal aid to support short-term, industry-driven training when states certify that the training program  meets labor market demand and deliver earnings above what typical workers with the previous level of education make in that state and thus justifying the investment.. Economic development executives now have a stronger basis to engage governors and state workforce boards, which hold decisive authority over which credentials align with the state’s economic priorities.

    This structure reinforces demand-driven talent development. It encourages tighter alignment among employers, training providers, workforce agencies, and economic development organizations. It also increases the strategic value of state labor market information and longitudinal earnings data. Regions that already integrate these functions gain an advantage. Fragmented systems face growing exposure.

    The Act also reshapes higher education’s role in state economies. OBBA imposes stronger performance expectations across both short-term credentials and degree programs. Programs that consistently produce low earnings outcomes face new disclosure requirements and the risk of losing eligibility. At the same time, new limits on graduate and parent borrowing and the elimination of Grad PLUS are likely to affect enrollment patterns and institutional finance models across state higher education systems.

    For states, these changes matter not only as education policy but also as economic strategy. Institutions will face pressure to reassess their program mix, pricing, and alignment with industry demand. States that treat higher education as a coordinated economic asset, rather than a stand-alone sector, will be better positioned to manage these shifts.

    On the place-based side, the Act raises expectations for existing investment tools without expanding them. Qualified Opportunity Zones remain in place, but outcome requirements increase. Federal oversight now places greater emphasis on whether Zones generate jobs, support business formation, and improve economic conditions in designated communities. Investment volume alone is no longer sufficient.

    This matters for state economic development agencies because in many areas, Opportunity Zones can influence where private capital flows. The new reporting framework increases scrutiny of designation decisions and long-term results. States must now demonstrate that Zones advance broader development objectives rather than operate as passive tax preferences.

    Taken together, these provisions send a clear federal signal. Talent development and place-based investment are being treated as interdependent components of economic development. Both are expected to deliver measurable economic returns. Both rely on state leadership to define priorities and validate outcomes. And both reward regions that align people, institutions, capital, and data around shared growth goals.

    For state economic development executives, the Act brings both opportunity and responsibility. It expands state influence over key levers of growth while raising expectations for performance. States that coordinate workforce, higher education, and investment strategies stand to capture greater value from federal policy. States that cannot demonstrate results face increasing risk as federal support becomes more conditional.

    The One Big Beautiful Act reforms education finance and federal tax incentives. More importantly, it signals that federal economic development policy will increasingly run through the states, with accountability as the price of authority.

  • Podcast: Data Under Pressure: What’s Breaking (and What Still Works) in Economic Intelligence

    From The Ribbon Cut Podcast:

    Public economic data systems are being stretched thinner at the same time local decision-making depends on them more than ever. In this episode of The Ribbon Cut, Susan and Charles are joined by Ken Poole to explain what’s happening behind the scenes at federal data agencies, and why staffing cuts, privacy constraints, and rising demand for localized detail are changing how workforce and economic data should be interpreted.

    In this episode:

    • Why public data systems are struggling to keep up with local demand.
    • How staffing losses at agencies like BLS impact continuity and reliability.
    • Where privacy constraints limit the granularity communities need.
    • Why private data sources are filling gaps—and where caution is required.
    • What this shift means for defensible, data-backed decision-making.

    For economic developers, analysts, and consultants who rely on workforce and employment data, this episode provides essential context for navigating today’s increasingly fragile data environment.

    Listen here.

  • Workforce Pell and Noncredit Training Helps Build the State Talent Pool

    Implications for States

    Overview

    The One Big Beautiful Bill Act of 2025 codified a major proposed change in how the federal government[BI1]  supports workforce training. For the first time, Congress expanded Pell Grant eligibility to include funding for short-term, career-focused programs designed to meet immediate industry needs. Beginning in July 2026, Pell Grants can support programs as short as eight weeks or 150 clock hours, far shorter than the traditional academic programs Pell has historically funded. This shift creates a new federal financing tool for rapid workforce development. Certain noncredit occupational programs may now qualify for Pell support if they align with state-certified labor market demand and meet new federal requirements for completion, job placement, and earnings outcomes (Brown, 2025; U.S. Department of Education [ED], 2025a).

    Supporting (or complementing) short-term and noncredit occupational education combined with state-funded business training grants and incumbent worker upskilling incentives can lead to significant economic returns. States will want to reconsider how to use Workforce Pell (as a new funding mechanism) to support certain industry-driven training programs to emphasize programs with short-term impacts to ensure Federal and state investments complement one another.

    What Workforce Pell Changes in the Talent Finance System

    Under the Workforce Pell rules developed through the Accountability in Higher Education and Demand-driven Workforce Pell (AHEAD) Committee process, governors or their designees decide which training programs are eligible for Pell support. To qualify, programs must prepare people for jobs that states have identified as in demand, high skill, or well paying. States are required to document how they define these jobs, how employers help validate demand, and how programs are reviewed at least every two years in coordination with broader workforce planning efforts (Brown, 2025; ED, 2025b).

    Eligible programs must meet three core requirements:

    • Completion and placement: At least 70 percent of participants must complete the program within 150 percent of the expected timeframe, and at least 70 percent must be employed in the second quarter after leaving the program.
    • Job alignment: Beginning in the 2028–2029 academic year, participants’ jobs must align with the occupation the program is designed to prepare them for, or with a comparable in-demand occupation.
    • Earnings-based cost limit: Program tuition and fees may not exceed the program’s “value-added earnings,” defined as median earnings three years after completion, adjusted for regional cost differences and reduced by 150 percent of the federal poverty guideline. (ED, 2025a).

    These requirements move short-term training decisively toward an outcomes-based funding model and raise the bar for programs historically financed through state grants, employer contracts, or student out-of-pocket payments. It also puts much more pressure on education and training providers to develop the data infrastructure to monitor worker/learner outcomes directly tied to the skill training offered.

    What the Evidence Says About Returns to Short-Term and Noncredit Training

    The evidence follows the design logic of Workforce Pell. Essentially, not all short-term training produces equivalent economic returns and that program selectivity matters. Increased earnings tend to be greater in fields with strong labor demand and wage progression while they are lower in fields that favor short, low-return offerings even when those offerings are responsive to employer needs.

    For instance, recent research by Bahr and Columbus (2025) provides one of the most rigorous large-scale analyses of labor market returns to community college noncredit occupational education. Using longitudinal administrative data from Texas, the authors find that participation in noncredit occupational training is associated with statistically significant earnings gains of approximately $2,000 per year within two years of completion, representing about a 3.8 percent increase over pre-training earnings.

    However, returns vary substantially by field, training type, and duration. Programs in transportation, engineering technologies, mechanics, and welding show returns two to four times larger than average, while some business, marketing, and information-related fields show returns that are statistically indistinguishable from zero. Returns are stronger for longer training durations and for employer-contracted training than for open-enrollment offerings, and they diminish sharply for repeat training spells (Bahr & Columbus, 2025).

    Implications for State-Funded Business Training Grants

    Workforce Pell will not eliminate the need for state-funded business training grants, but it will change how states should use them. First, for many entry-level, widely recognized credentials, Pell Grants can now cover training costs that states have traditionally paid for through their incentive programs. When short-term programs show strong earnings outcomes and meet federal requirements, Pell can finance tuition and fees directly. This creates a strong incentive for states to avoid paying twice for the same training. The effect will be most noticeable in high-demand programs such as commercial driver’s licenses, welding, nursing assistant, and child care credentials, where state and federal funding have often overlapped (ED, 2025a; Bahr & Columbus, 2025).

    Second, state training incentives are also likely to shift toward employer-specific and incumbent worker upskilling. Research shows that training designed and delivered in partnership with employers often produces stronger earnings gains than open-enrollment programs (Bahr & Columbus, 2025). These employer-driven programs typically focus on company-specific skills, new equipment, or process improvements that are critical for productivity but are not easily packaged as portable credentials. As a result, a clearer division of roles is emerging. Federal Pell dollars are better suited to support standardized, widely recognized credentials that feed broad talent pipelines, while state business training grants are best used to help employers upskill their existing workforce and adopt new technologies.

    Third, Workforce Pell also raises the bar for accountability across state training programs. Because federal funding now depends on clear evidence of program completion, job placement, and earnings outcomes, similar expectations are likely to extend to state-funded incentives. Legislators and oversight bodies may increasingly question why state dollars support training programs that cannot demonstrate results comparable to those required for federal assistance.

    Risks and Tensions for State Talent Systems

    Several policy risks arise where Workforce Pell intersects with state training incentives. One risk is the crowding out of flexible training. If states assume Pell will cover most short-term workforce needs and scale back incumbent worker programs, they may underinvest in the firm-specific training that supports productivity gains and technology adoption. Evidence shows that returns to training vary widely by field and design, and that some high-value, employer-driven programs may not qualify for Pell support even when demand is strong (Bahr & Columbus, 2025).

    A second risk involves misalignment around career pathways. While federal rules require Workforce Pell programs to be stackable over time, students who move directly into further education are counted as not employed for job placement purposes. This creates a disincentive for institutions to encourage advancement, which may conflict with state objectives to build a skilled workforce over the long term (Brown, 2025). In certain industries and occupations, longer-term education is valuable but benefits may not be seen within the three-year measurement period.

    A third risk relates to interactions with state aid. New restrictions limit Pell eligibility when non-federal grants or scholarships equal or exceed a student’s cost of attendance. As a result, states may need to revisit last-dollar aid programs and employer-paid training models to avoid unintentionally displacing federal funds or adding administrative complexity (U.S. Department of Education [ED], 2025b).

    Strategic design choices for states
    States can modernize business training grants and incentives to complement Workforce Pell rather than compete with it.

    1. Reframe business training grants as “Pell-complement” funding
      Use state dollars for what Pell does not do well: onboarding supports, transportation, childcare, tools, testing fees, paid release time, wage offsets, and employer coordination costs. This preserves a strong role for state incentives while letting Pell cover eligible tuition and fees where appropriate.
    2. Create a two-lane talent finance model
      Lane A: Pell-aligned portable credential pipelines in which the state role centers on rapid certification of in-demand occupations, employer validation, and helping institutions meet performance guardrails (Brown, 2025).
      Lane B: Customized incumbent worker upskilling and productivity training in which state incentives focus on technology adoption, process improvement, and firm-specific training that increases competitiveness but may not fit Workforce Pell eligibility.
    3. Add performance features to state incentives[BI2]  without copying federal rules
      Workforce Pell requires completion, placement, and earnings-related guardrails (Brown, 2025; U.S. Department of Education, 2025a). State grants can adopt lighter-weight performance signals, such as wage progression, retention, credential attainment, or productivity proxies, while maintaining flexibility for employers.
    4. Use the governor certification role to integrate economic development priorities
      Because governors or designees certify eligible programs and must review in-demand lists regularly (Brown, 2025), states can formalize a process that directly incorporates business attraction targets, cluster strategies, and major project pipelines into the “in-demand” determinations. This approach is one of the cleanest ways to align federal training subsidy with state growth strategy.
    5. Prepare for data and verification capacity needs
      In its analysis, the National College Attainment Network flags that governors will be responsible for verifying job placement and that occupational matching is hard with typical administrative data (Brown, 2025). If states build stronger wage record matching, credential registries, and employer reporting channels, they make compliance easier while also strengthening the case for complementary state training incentives.

    Bottom line for state economic development executives
    Workforce Pell should not replace state business training grants. However, it should encourage state to change what those grants support and how states justify their value. The most effective posture is “federal dollars for portable, demand-certified pipelines” and “state dollars for speed, customization, wraparound supports, and productivity-focused upskilling.” That combination minimizes duplication, protects flexibility for employers, and strengthens statewide talent competitiveness under the new federal rules (Brown, 2025).

    References

    Bahr, P. R., & Columbus, R. (2025). Labor market returns to community college noncredit occupational education. Educational Evaluation and Policy Analysis. https://doi.org/10.3102/01623737251360029

    Brown, C. (2025, December 22). Highlights from the AHEAD Committee: Workforce Pell consensus reached. National College Attainment Network. https://www.ncan.org/news/717100/Highlights-from-the-AHEAD-Committee-Workforce-Pell-Consensus-Reached.htm

    U.S. Department of Education. (2025a). Workforce Pell: Value-added earnings test. https://www.ed.gov/media/document/2025-ahead-workforce-pell-value-added-earnings-test-112702.pdf

    U.S. Department of Education. (2025b). AHEAD negotiated rulemaking: Eligible workforce programs and grant aid from non-federal sources. https://www.ed.gov

     

  • The Impact of the Childcare Challenge on Regional Economic Competitiveness

    Economic development succeeds when regions align talent, infrastructure, and employer demand. Access to quality, affordable childcare is a form of economic infrastructure that directly shapes labor force participation, business productivity, and regional competitiveness.

    National research consistently shows that inadequate access to childcare suppresses workforce participation and slows economic growth. Estimates place the annual cost to the U.S. economy at more than $120 billion in lost earnings, productivity, and tax revenue (First Five Years Fund, 2025). State-level analyses from the U.S. Chamber of Commerce Foundation show that childcare disruptions cost states an average of roughly 0.4 percent of GDP each year (U.S. Chamber of Commerce Foundation, 2024).

    Employer experience reinforces this national picture. A December 2025 statewide survey of hundreds of employers in Virginia found that childcare challenges are directly affecting hiring, retention, and productivity across the Commonwealth (Virginia Chamber of Commerce Foundation, 2025). Not only is childcare a family issue, but it is also a business constraint with measurable economic consequences.

    At the same time, policy research underscores that these impacts reflect deeper structural failures in the childcare market where prices remain unaffordable for families but still insufficient to sustain providers or pay early educators a livable wage (The Century Foundation, 2025). The result is chronic supply shortages and workforce instability that undermine regional labor markets.

    Why Workforce Participation Is the Economic Issue

    Labor shortages remain a defining challenge for state and regional economies. Childcare plays a large role in those shortages. Nationally, more than one-quarter of households report experiencing a job change due to childcare challenges, and a growing share of parents expect to leave the workforce entirely if conditions do not improve (U.S. Chamber of Commerce Foundation, 2024).

    In a December 2025 survey, Virginia employers report similar and often more severe impacts. About 88 percent of employers report that employees are late or miss work due to childcare issues, 65 percent report workers reducing hours, 41 percent report declined job offers or promotions, and 34 percent report workers leaving jobs altogether (Virginia Chamber of Commerce Foundation, 2025). Employers with nontraditional or unpredictable schedules report even greater disruption.

    These outcomes translate directly into reduced labor force participation and weaker execution of workforce strategies. Based on relevant academic studies and employer survey evidence, inadequate access to affordable childcare may reduce overall labor force participation by approximately 0.5 to 1.0 percentage points. Participation among parents of young children may be 7 to 10 percentage points lower than it would be under universally affordable and accessible childcare (Baker, Gruber, & Milligan; U.S. Department of the Treasury, 2021; Virginia Chamber of Commerce Foundation, 2025).

    For regions pursuing growth in sectors with a high share of women in their workforce (e.g., health care, hospitality, logistics, retail, and other labor-intensive industries), childcare access increasingly determines whether economic strategies succeed or stall.

    The Business Cost of Inaction

    For employers, childcare instability drives absenteeism, turnover, and replacement costs. These costs are rising faster than the cost of providing childcare as a retention and workforce stabilization tool. A comprehensive review of the economic literature finds that the average cost of employee turnover is approximately 40 percent of a worker’s annual salary, with a median closer to 24 percent and wide variation by occupation and industry (Bahn & Sanchez Cumming, 2020). In lower-wage and service-sector roles, replacement costs commonly range from 15 to 30 percent of annual wages. For specialized or managerial roles, costs often exceed annual pay.

    This research draws on 31 case studies across industries including health care, hospitality, retail, transportation, education, manufacturing, and finance. It captures both direct costs, such as recruiting and training, and indirect costs, such as lost productivity, service disruptions, and customer loss. These indirect costs are frequently underestimated but materially affect firm performance.

    Virginia employers link many of these pressures directly to childcare instability. In the December 2025 survey, 81 percent of employers reported that childcare challenges affect hiring and retention, and 85 percent reported impacts on business productivity (Virginia Chamber of Commerce Foundation, 2025). Together, the research and employer evidence show that childcare breakdowns create recurring business costs rather than isolated workforce disruptions.

    Household Affordability Shapes Regional Talent Supply

    Childcare affordability directly affects the depth and stability of the labor pool. Average annual childcare costs exceed $12,000 and consume more than 13 percent of household income in many states, far above the commonly cited affordability benchmark of 7 percent (Bipartisan Policy Center, 2020; Economic Policy Institute, 2025).

    In Virginia, affordability and access challenges are tightly linked. Eighty-six percent of employers report that their employees struggle with childcare expenses, and 65 percent report employees cannot find programs with open seats (Virginia Chamber of Commerce Foundation, 2025). When families cannot afford or access care, workers reduce hours, decline advancement opportunities, or exit the workforce.

    The Century Foundation emphasizes that affordability challenges cannot be separated from supply constraints. Public subsidies reach only a fraction of eligible families, while providers face rising overhead costs and persistently low wages that drive educator turnover and limit capacity expansion.

    Long-term impacts compound. Workers who leave the labor force for several years due to childcare constraints can lose hundreds of thousands of dollars in lifetime earnings, weakening household stability and shrinking the regional talent pool (Center for American Progress, 2016). Skills erosion during time out of the workforce raises reentry costs for both workers and public workforce systems.

    What Research Says

    There is broad agreement across federal agencies, business organizations, and labor economists on the core diagnosis. Childcare constraints caused by underinvestment and inadequate supply are market failures that limit productive capacity (U.S. Department of the Treasury, 2021). Employer survey evidence from Virginia strengthens this conclusion and shows that businesses are ready to engage.

    Evaluations of cost-sharing models, such as Tri-Share, suggest that these approaches can improve affordability and workforce attachment for participating families. Employers report improved retention and recruitment, and parents report a higher likelihood of remaining in the workforce (Public Sector Consultants, 2024). However, Tri-Share alone is not sufficient. The Century Foundation finds that scalable solutions also require expanded childcare supply, reductions in childcare deserts, and substantially improved wages for early educators.

    Limits and Design Choices Matter

    In short, affordability alone does not guarantee access. In regions with limited provider capacity, families may qualify for assistance but still struggle to find care. Cost-sharing works best when paired with strategies that stabilize provider finances and expand the early educator workforce.

    Scale matters. Pilot programs demonstrate proof of concept, but system-level labor force impacts require broader adoption and sustained funding.

    Employer participation hinges on cost and simplicity. The Virginia survey shows that cost is the biggest barrier preventing employers from offering childcare benefits. Employers call for increased state funding and incentives to crowd in business, private, and local investment (Virginia Chamber of Commerce Foundation, 2025).

    Administration matters. Programs that reduce complexity, pool public and private funding, and avoid tying benefits to a single employer offer more durable paths to affordability, supply expansion, and workforce stabilization.

    Implications for Regional Economic Development

    Childcare now sits squarely within economic development strategy because it is a critical talent pipeline constraint and disruptor for a stable labor pool. Regions that depend on a reliable workforce must address barriers to work. Evidence from national research, employer surveys, and policy analysis points in the same direction. Childcare constraints limit growth, and shared-responsibility models can help when embedded in a broader strategy.

    Public-private cost-sharing models can play a role when paired with investments that expand supply and address the true cost of quality care. Well-designed approaches crowd in employer investment, stretch public dollars, and address workforce barriers identified directly by businesses.

    To ignore childcare constraints is to accept avoidable limits on labor force participation and productivity. Integrating childcare into workforce and economic development strategy strengthens regions, supports employers, and expands opportunity.

    References

    Bahn, K., & Sanchez Cumming, C. (2020). Improving U.S. labor standards and the quality of jobs to reduce the costs of employee turnover to U.S. companies. Washington Center for Equitable Growth.

    Bipartisan Policy Center. (2020). Demystifying childcare affordability.

    Center for American Progress. (2016). The hidden cost of a failing childcare system.

    Century Foundation, The. (2025). The Tri-Share model is not a solution to the childcare crisis.

    Economic Policy Institute. (2025). Family budget calculator.

    First Five Years Fund. (2025). How a lack of affordable childcare impacts the economy.

    Public Sector Consultants. (2024). Michigan Tri-Share 2024 evaluation report.

    U.S. Chamber of Commerce Foundation. (2024). Untapped potential: How childcare impacts state economies.

    U.S. Department of the Treasury. (2021). The economics of childcare supply in the United States.

    Virginia Chamber of Commerce Foundation. (2025). Childcare is the foundation of Virginia’s economy: Employer survey summary (December 2025).

  • Rebuilding How America Delivers: What State Economic Development Leaders Can Do Next

    States are at a critical inflection point. Significant federal resources have flowed to communities, creating real opportunity to strengthen housing supply, modernize infrastructure, improve water systems, and drive regional growth. These investments also exposed a clear challenge. As AmericaFWD’s State of Play (released December 2025) makes clear, the systems used to plan, fund, and deliver projects are not keeping up with the scale or speed that today’s economy requires.

    For state economic development leaders, the message is straightforward and operational. Communities want results they can see. They want projects that move on schedule, control costs, and translate investment into jobs, competitiveness, and growth. Too often, delivery slows because responsibilities are fragmented, processes are outdated, and incentives across agencies do not align. Capital helps. Execution determines outcomes.

    The report highlights an important advantage that states already have. Local governments, utilities, and regional partners are ready to deliver. When outcomes fall short, the barrier is rarely vision or commitment. It is capacity, coordination, and process. States sit at the center of that equation. When state systems align funding, permitting, technical assistance, and accountability, projects move faster and perform better.

    AmericaFWD also reinforces a lesson state leaders know well. Housing, transportation, water, and economic opportunity operate as connected systems. Treating them separately raises costs and delays impact. Integrated planning across agencies and programs improves sequencing, reduces duplication, and strengthens returns for communities and employers alike. States are uniquely positioned to drive that alignment.

    A central takeaway for states is the importance of capacity. Communities with skilled staff, technical expertise, and clear authority consistently outperform those without it. Strategic technical assistance, clearer guidance, and streamlined state-level processes help local teams manage risk and deliver projects efficiently. This is not about adding bureaucracy. It is about improving performance across the delivery system.

    AmericaFWD’s State of Play offers a constructive path forward. Its near-term agenda focuses on strengthening local capacity, accelerating project delivery, modernizing systems, and sharing what works across states and regions. For state economic development leaders, the opportunity is clear.

    Apply these lessons now to turn investment into durable growth, competitive places, and visible results. This moment calls for sharper execution. The tools are available. The challenge is alignment and delivery. This report provides a practical blueprint for moving faster and delivering better outcomes for states and the communities they serve.

    Read full report here.

  • Incentivizing Innovation

    American manufacturing employment has been on the decline since the late 1970s. Offshoring—moving production overseas to lower costs—together with productivity and technological improvements like artificial intelligence and automation, have contributed to a significant downturn in manufacturing employment in the US.[1] As such, more states have shifted their focus from traditional industries, like manufacturing, to innovation-driven sectors.

    While innovative technologies in advanced manufacturing are helping increase the number of US-produced goods, manufacturing jobs are not being replaced at the rate in which they were lost. In 1970, 18 million workers had jobs in the manufacturing sector, accounting for 31% of private employment. The market share was as little as 9.7% in 2023.[2] To replace employment and strengthen their economies, states find themselves competing with one another to draw entrepreneurs and develop the next technology hub. Almost every state is taking a multifaceted approach to attract innovation and tech dollars, employing a different combination of research and development (R&D) incentives and venture capital (VC) funding.

    Of the existing VC and R&D state-offered business incentives, shown broken down by program type in Figure 1, 58% are targeted toward organizations involved in research and development. Tax incentives comprise 66% of all research and development incentives and are the primary vehicle for states promoting R&D. Grants are the second most popular, accounting for 27% of the available incentives.

    Figure 1: R&D State Business Incentives by Program Type

    Naturally, the most common way for states to incentivize venture capital is through encouraging equity investment, which constitutes over 45% of VC incentives in the US. Figure 2 shows that the remaining VC incentives are distributed somewhat evenly among the other program types: tax, grants, and loans. Equity investments are usually offered to startups themselves while other program types are available for venture capitalists to encourage investment into new companies of all stages.

    Figure 2: VC State Business Incentives by Program Type

    States incentivize R&D and VC with different program types because of each business’s distinct needs. R&D tax credits are known to be effective at drawing innovation: a National Bureau of Economic Research working paper found that R&D tax credits are linked to a 20% increase in the rate of new startups in an area over 10 years.[3] Tax credits spur that steady, long-term growth, while equity investments are intended to create more immediate results. Helping startups efficiently access direct funding can increase their chances of commercializing, especially when a business is in the “valley of death” phase, where startups face high operating expenses but have not yet generated revenue.

    Alaska, Missouri, and South Dakota are the only states that do not currently offer business incentives designed specifically for startups or research and development. Conversely, Puerto Rico is the only US territory that offers incentives, providing one R&D tax program and two R&D grant programs. On average, a US state offers three VC or R&D incentives. Five states—Oklahoma, Arkansas, Massachusetts, Connecticut, and North Dakota—provide at least double the country’s average number of programs.

    Table 1: Number of VC and R&D Incentives Offered by State

    Table 2: Number of Incentives of each Program Type Offered by State

    By avoiding a one-size-fits-all approach, each state can tailor its incentives to target specific types of businesses and startups. States, then, do not need to directly compete with one another because they are pursuing different kinds of research and venture capital. Consequently, businesses with high levels of research and development can shop around to find the best sites for innovation, while startups can choose the state with the best ecosystem in which to begin operations and consolidate financial support.

    Are you an entrepreneur or researcher? Are you interested in moving to a new location or establishing your business at an innovation hub? If so, C2ER’s State Business Incentives Database can help you find a state whose incentives best align with your organization’s goals and funding needs.

  • Incentives Update: General Trends

    As we wrap up the C2ER State Business Incentives update, we’re looking at nationwide trends. What kinds of programs are states launching? What challenges are they trying to solve? Where do we see the most activity? This blog explores how new and evolving incentives are shaping state economic development strategies.

    Program Numbers and Focus

    Although the number of incentive programs continues to increase, new incentive program creation has steadily declined over time. As shown in Figure 1, the number of new programs peaked in 2011 and has followed a downward trend since then. While 2025 shows a spike in new programs, the broader trend suggests that states have generally reduced their rollout of new incentive programs. Generally, in response to recessions, states appear to introduce more new incentive programs, For example, in 2020, several states introduced programs to reduce business disruption risks. Such as Maryland’s Manufacturing Disruption Mitigation Assistance Program (MDMAP) and Montana’s Agriculture Adaptability Program.

    Several new programs in 2024 and 2025 are focused on boosting childcare resources. For example, in 2024, Nebraska introduced the School Readiness Tax Credit and Child Care Nonrefundable Tax Credit. This offers relief to operators and providers of early childcare and education programs. Utah and Alabama followed suit in 2025, rolling out the Child Care Business Tax Credit and Childcare Facility Tax Credit, respectively. Both are designed to encourage employer-provided childcare and improve childcare availability.

    Moving forward, trends suggest that we may see states increase the number of incentives added annually. Specifically, states may respond to reshoring efforts by encouraging increases in domestic manufacturing.  In doing so, states may also launch export support and workforce training, upskilling, and recruitment incentives to supplement manufacturing growth, production expansion, and increased demand for labor.

    Figure 1.

    Program Types

    Over half of the active incentive programs in the database are categorized as either tax credit or exemption programs, grant programs, or loan programs. Grants, tax credits/exemptions, and loans are common state business incentives because they’re relatively easy to implement and administer through existing systems. Ensuring high performance from recipient companies, these types of programs also offer more straightforward ways to measure economic impact. Other potential incentives, like equity investment or insurance, are much less popular options (Figure 2).

    Figure 2.

    Incentive programs continued to be multifaceted and often address multiple business needs. However, as expected, many focus on enhancing the return on investment (ROI) for business expansion, improving access to capital, and reducing tax or regulatory burdens. Other notable business needs include infrastructure or facility development, product development, and workforce development (Figure 3).

    Figure 3.

    States continue to typically use statewide programs for impacting local and regional economies. The small number of regionally focused incentives are usually in designated development zones, underdeveloped, or rural areas. This trend is consistent with previous updates, showing most programs offer geographically broad economic support.

    Figure 4.

    Macroeconomic fiscal and monetary tightening typically slows business expansion and economic activity, which may prompt states to introduce more incentive programs to boost demand. If previous periods of economic hardship are an indication, the number of new programs may spike to mitigate business belt-tightening.

    The push to bolster domestic manufacturing may also encourage incentive program growth to retain and grow existing businesses, attract new businesses, encourage exports, and prepare the workforce to meet changing labor needs. In addition to manufacturing, we may also expect states to prioritize workforce initiatives and programs like childcare or housing to support a robust workforce. These efforts will be essential in fostering long-term economic resilience, helping states adapt to evolving challenges and secure sustainable growth. To learn more about business incentives, please check out C2ER’s State Business Incentive Database.