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State Economic Development Bulletin
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U.S. Job Openings Rise, Underscore Hiring Difficulties (Bloomberg). U.S. job openings rose to a record high in May, underscoring persistent hiring difficulties and reflecting more vacancies in the health care, education, and hospitality industries. The number of available positions climbed to 9.21 million during the month, according to the U.S. Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). The availability of vaccines paired with a broader reopening of the economy has spurred a snapback in economic activity in recent months, but consumer demand has largely outpaced businesses’ ability to hire. In response, many businesses have begun raising wages and offering incentives like hiring bonuses to attract applicants. Having a worker shortage at a time when millions of Americans remain out of work likely reflects several factors including childcare challenges, lingering coronavirus concerns, and expanded jobless benefits. Those factors will likely abate in the coming months.
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* New American Rescue Plan Act Data Tool *
ARPA State Fiscal Recovery Fund Allocations
The $1.9 trillion American Rescue Plan Act (ARPA) included $350 billion in emergency funding for state, local, and territorial and tribal governments, known as the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). State governments and the District of Columbia will receive $195.3 billion of the state portion of the CSLFRF over two tranche disbursements. States must obligate these dollars by December 31, 2024, and spend the funds by the end of 2026. To illustrate the ways states are utilizing their Fiscal Recovery Fund allocations, the National Conference of State Legislatures (NCSL) created a database detailing states actions. Using NCSL’s database, you can search actions by state, category, and authority. A second tab of the database provides a breakdown of the estimated federal disbursements to states. The database provides up-to-date, real-time information for states, updated daily.
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State Economic Performance
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Unemployment Rates Lower in All Metropolitan Areas (Bureau of Labor Statistics). Unemployment rates in May 2021 were lower than a year earlier in all 389 metropolitan areas. A total of 27 areas had jobless rates of less than 3.0 percent while 6 areas had rates over 10.0 percent. Burlington, Vermont, had the lowest unemployment rate, 1.2 percent, followed by Manchester, New Hampshire, 1.4 percent. Yuma, Arizona, had the highest rate, 17.0 percent. A total of 247 areas had May unemployment rates below the U.S. rate of 5.5 percent, 131 areas had rates above it, and 11 areas had rates equal to the nation. The largest over-the-year unemployment rate decreases occurred in Atlantic City, New Jersey (−25.9 percentage points). These data are from the Bureau of Labor Statistics’ Local Area Unemployment Statistics program.
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* Economic Outlook *
Top States for Business 2021
Virginia, North Carolina, Utah, Texas, and Tennessee scored highest in CNBC’s annual study of America’s Top States for Business. The CNBC methodology scores all 50 states on 85 metrics in 10 broad categories of competitiveness. Data is analyzed from a variety of sources and then weighted based on how frequently states use the categories as selling points on their economic development websites. If, for example, more states are pitching their low business costs, Cost of Doing Business carries more possible points. With the global economy still shaky, Cost of Doing Business is this year’s heaviest weighted category, topping Workforce. Economic uncertainty helped raise the profile of Access to Capital, and discussions on Infrastructure increased its weight in this year’s study. States can earn a maximum of 2,500 points.
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Promoting Competition in the American Economy (The White House). On July 9, 2021, President Biden issued Executive Order 14036, “Promoting Competition in the American Economy,” which targets anticompetitive practices and corporate consolidation across many sectors of the U.S. economy. The Executive Order contains 72 initiatives being undertaken by more than a dozen federal agencies aimed at improving competition, reducing prices for consumers, boosting wages for workers, and facilitating innovation. A “whole-of-government” approach is encouraged “to address overconcentration, monopolization, and unfair competition in the American economy.” The order calls upon the Federal Trade Commission (FTC), Department of Justice (DOJ), Department of Agriculture, Department of Transportation, Federal Communications Commission, Federal Maritime Commission, and Federal Energy Regulatory Commission, among others, to collectively and vigorously enforce antitrust laws to combat abuses, such as in labor markets, agricultural markets, healthcare markets, and the tech sector.
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The Case for More U.S. Free Trade Deals (International Trade Commission). Over time, U.S. free trade agreements (FTAs) have expanded in both depth and breadth. Many stakeholders support more detailed and prescriptive FTA requirements, arguing that they help level the playing field when other markets are less open than those of the United States; foster a more transparent and rules-based system; and address new challenges as technology and circumstances evolve. Others, however, find that U.S. FTAs often serve the interests of multinational corporations at the expense of American workers—for example, by promoting trade liberalization and investor protections while failing to adequately protect worker rights and the environment. A recently released study by the International Trade Commission (ITC) finds U.S. free trade deals have had a small, positive effect on the economy. According to the report, they led to an estimated increase in U.S. real GDP of $88.8 billion and 485,000 additional jobs. U.S. trade agreements have also had a positive effect on U.S. imports and exports. However, those gains in jobs were not evenly distributed, with the biggest gains estimated for college-educated male workers.
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Maryland Offers Extra Tax Relief in Opportunity Zones (OpportunityZone.com). A new program connected to Maryland’s Opportunity Zones (OZs) is granting additional tax relief to help spur economic development in the state’s distressed areas. Project Restore is a $25-million economic recovery initiative that provides financial incentives for small businesses and commercial developers to revitalize vacant retail and commercial space. The state contains 149 OZs, and under the program, businesses in those OZs are eligible for one to two years of sales tax relief rebates, depending on the county. OZs in the city of Baltimore, for instance, will be eligible for the two-year incentive. The maximum benefit is $250,000 per year. Maryland is also offering small businesses rental subsidies of $2,500 per month for 12 months — up to $30,000 — to help offset start-up costs during their first year.
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The Opportunity Zones program provides a tax incentive for investors to re-invest their unrealized capital gains into Opportunity Funds that are dedicated to investing into Opportunity Zones designated by the chief executives of every U.S. state and territory. Treasury has certified more than 8,700 census tracts as Qualified Opportunity Zones (QOZs) across all states, territories, and the District of Columbia. For a map of all designated QOZs, click here.
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Tight Housing Market Expected to Persist (Federal Reserve Board). During the COVID-19 pandemic, the number of homes for sale fell to historic lows. Researchers at the Federal Reserve Board find that, outside of a brief shock to housing supply at the beginning of the pandemic, 93 percent of the decrease in the monthly stock of homes for sale and nearly all the rise in housing prices was driven by increased demand (a higher inflow of buyers as opposed to a lower inflow of sellers.) To keep housing price increases at pre-pandemic levels would have required an unusually large 20 percent increase in the number of new for-sale listings. Even if pandemic-related constraints on the supply of housing relax, the authors anticipate that strong demand for houses will persist, outstripping the plausible amount of new construction. In short, they expect the housing market will remain very tight in the short run.
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Most U.S. Business R&D Performed in 10 States (National Science Foundation). Businesses performed $262 billion of research and development (59.7% of U.S. total business R&D) in just ten U.S. metro areas, according to estimates by the National Science Foundation. The geographic concentration of business R&D in the United States is much higher than that of other economic indicators, such as gross domestic product (GDP) or population. Ten states accounted for almost three-quarters (73%) of all business R&D in the United States in 2018. Five of these states—California, Massachusetts, Michigan, New Jersey, and Washington—had R&D intensities much higher than the national average. Illinois, North Carolina, Pennsylvania, New York, and Texas had the next largest levels of business R&D performance. Of the remaining 40 states and Washington, DC, only 5 had high business R&D intensities compared to the U.S. average: Connecticut, Delaware, Idaho, New Hampshire, and Oregon.
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U.S. Commerce Department Creates Interactive Map of Digital Divide (NTIA). The U.S. Department of Commerce’s National Telecommunications and Information Administration (NTIA) released a new publicly available digital map that displays key indicators of broadband needs across the country. The “Indicators of Broadband Need” tool links poverty usage and broadband access by compiling data sets from the U.S. Census Bureau, Federal Communications Commission (FCC), M-Lab, Ookla, and Microsoft. The tool shows where high-poverty communities are in relation to internet usage patterns and access to computers and related equipment. NTIA also offers states and federal partners a geographic information system (GIS) platform called the National Broadband Availability Map (NBAM) with the ability to upload GIS files to compare proposed projects. Recently, NTIA announced Arizona, Idaho, Kansas, Maryland, Mississippi, and South Dakota joined NBAM, bringing the total number of participating states to 36. The mapping platform allows these states to better inform broadband projects and funding decisions.
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Pennsylvania Creates Angel Investment Venture Capital Program (Ballard Spahr). Startup companies based in Pennsylvania can apply for grants from the state’s new Angel Investment Venture Capital Program. The $5 million program provides grants to companies focused on the commercialization of new technologies or those deemed highly beneficial to the economic growth of Pennsylvania. A grant awardee must also have fewer than 100 employees, at least 51 percent of its workforce within the Commonwealth, and in operation for less than five years. Companies that have received more than $2 million in private equity investments or $1 million from a single investor are ineligible, as are real estate, insurance, accounting, law, or physician offices. Businesses engaged in retail sales are ineligible unless the primary purpose of the business is to support and develop e-commerce. The program runs through June 30, 2022.
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California Boosts Film and TV Production Tax Credit (Deadline Hollywood News). Both the California Assembly and Senate overwhelmingly passed a boost to the state’s film and TV tax credit, fueled by the large surplus in the state’s budget. California Governor Newsom is expected to sign the legislation, which, over the next two years, adds $90 million annually to the state’s $330 million production incentives. The additional money is directed at TV, with $75 million for recurring series and $15 million for series that relocate to the state. It also establishes a $150 million fund designed to encourage the development of new and renovated sound stages, positioning the state to be a center for streaming production. The 10-year program provides a 20-25 percent credit for productions on those stages. Those eligible would have to own more than 50 percent of the movie or series project and be the same owners or lessees of the stages. The credit also has diversity requirements, requiring plans for hiring workers that are “broadly reflective” of California’s population.
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State Broadband Expansion Incentive Trends (C2ER). To ensure equitable access to broadband internet and spur economic development in underserved communities, many states offer incentive programs to for-profit businesses, local governments, and/or non-profit organizations to expand broadband internet access throughout the state. The incentives can take a variety of forms. Some states offer specific tax credits relating to broadband infrastructure development, like the Mississippi Broadband Technology Tax Credit. In many states, infrastructure and investment programs that are not explicitly advertised as broadband expansion programs can be used to expand internet access and promote prosperity in communities. States can also leverage federal programs, such as the Community Development Block Grant and New Markets Tax Credit, to assist underserved populations and ensure equitable internet access.
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The State Business Incentives Database is a national database maintained by the Council for Community and Economic Research (C2ER) with almost 2,000 programs listed and described from all U.S. states and territories. The Database gives economic developers, business development finance professionals, and economic researchers a one-stop resource for searching and comparing state incentive programs. To view the information available in the database, click here.
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Arkansas Releases Economic Recovery Strategy (Heartland Forward). Arkansas can implement a range of strategies in six key areas to guide itself out of the economic harm caused by the COVID-19 pandemic, according to a report written by think tank Heartland Forward of Bentonville and the governor’s Economic Recovery Task Force. The report addresses opportunities for the state in talent and workforce, innovation and research, entrepreneurship and small businesses, health care, supply chains and logistics, and high-speed internet. It recommends that Arkansas pursue more public-private partnerships and invest even more in broadband deployment. It also recommends making funding for the Arkansas Economic Development Commission (AEDC) permanent rather than appropriated on an annual basis, possibly by using some of Arkansas’ near $1 billion budget surplus. The state’s economic development efforts should also embrace innovation as fundamental to its long-term growth objectives, identify and support ventures with high-growth potential, and realign AEDC’s incentives and metrics with knowledge-based economic development.
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Talent Development/Attraction
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Priority Skills for the Future of Work (McKinsey & Company). In a labor market that is more automated, digital, and dynamic, workers can benefit from having a set of foundational skills that help them add value beyond what can be done by automated systems and intelligent machines, operate in a digital environment, and continually adapt to new ways of working and new occupations. These skills apply no matter the industry sector or one’s occupation. Based on a survey of 18,000 people in 15 countries, McKinsey’s research identified 56 foundational skills that showed with higher proficiency comes the higher likelihood of employment, higher incomes, and job satisfaction. The findings suggest that governments should consider reviewing and updating curricula and training programs to focus more strongly on these skills.
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Overcoming the Workforce Conundrum (IEDC). During COVID recovery, the mismatch between employer needs and the available labor force has become even more front and center and a major obstacle to economic recovery. According to a recent International Economic Development Council (IEDC) report, many communities lack appropriate education and job-training programs that align with employers’ needs and shifts in the labor market. Several state and regional efforts highlight potential paths forward. Alabama, for example, was one of eight states to win a $17.8 million Reimagine Workforce Preparation grant through the coronavirus relief bill. Utilizing this grant, the Alabama Community College System, the Alabama Technology Network, and Alabama Industrial Development Training are delivering training programs over three years to ensure a robust workforce pipeline in the state to better match employer needs. Ohio provides another example. The Ohio to Work initiative brings together JobsOhio’s network partners, several non-profits, the Urban League of Greater Cleveland, and an array of employers to support workers displaced from jobs in Cleveland – Cuyahoga County during the pandemic.
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SEDE Network Updates
* Check out the SEDE Website*
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StateEconomicDevelopment.org
The SEDE Network engages in regular activities and events throughout the year. You can stay up to date on all these activities via the SEDE Network website.
Click the link above and check it out!
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The SEDE Network Steering Committee includes: Stefan Pryor (RI), Chair; Sandra Watson (AZ), Vice Chair; Julie Anderson (AK); Mike Preston (AR); Kurt Foreman (DE); Don Pierson (LA); Kelly Schulz (MD); Kevin McKinnon (MN); Chris Chung (NC); Alicia Keyes (NM); Michael Brown (NV); Andrew Deye (OH); Dennis Davin (PA); Adriana Cruz (TX); Joan Goldstein (VT); Mike Graney (WV).
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For further questions on the content in this Bulletin or for information on the SEDE Network contact Marty Romitti, CREC Senior Vice President, at mromitti@crec.net.
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