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State Economic Development Bulletin
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Employment Higher in all 50 States (Bureau of Labor Statistics). Nonfarm payroll employment increased in all 50 states and the District of Columbia between April 2020 and April 2021. The largest job increases occurred in California (+1,302,100), New York (+1,029,800), and Texas (+1,007,100). The largest percentage increases occurred in Michigan (+21.1 percent), Nevada (+17.6 percent), and Rhode Island (+17.1 percent). These data, based on surveys conducted with businesses and government agencies, are compiled by the U.S. Bureau of Labor Statistics’ Current Employment Statistics (CES) program and are seasonally adjusted.
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* Supply Chain Disruptions Task Force *
100-Day Supply Chain Findings Released
Findings have been released from the 100-day supply chain review for four critical product areas: semiconductor manufacturing and advanced packaging; large capacity batteries, like those for electric vehicles; critical minerals and materials; and pharmaceuticals and active pharmaceutical ingredients. The effort followed President Biden’s signing of Executive Order 14017 in February 2021, directing a whole-of-government approach to assessing vulnerabilities in, and strengthening the resilience of, critical supply chains. Across the four critical products, there are a set of inter-related themes and findings to address key supply chain vulnerabilities. The susceptibilities include insufficient U.S. manufacturing capacity, misaligned incentives and short-termism in private markets, industrial policies adopted by allied, partner, and competitor nations, geographic concentration in global sourcing, and limited international coordination.
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State Economic Performance
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Vaccine Hesitancy Varies by State (U.S. Census Bureau). Nationwide 11.4 percent of adults 18 years and older are hesitant about receiving a COVID-19 vaccine. The COVID-19 vaccine tracker uses data from the Census Bureau’s Household Pulse Survey, which in January 2021 added a new series of questions about COVID-19 vaccinations and attitudes toward them. The interactive visualization allows data users to explore national and state vaccination rates, the percentage of people by state hesitant to get a COVID-19 vaccine, the most common reasons cited for hesitancy to get a vaccine, vaccination rates by population subgroups, and vaccine hesitancy rates by population subgroups. The visualization below shows the percentage of each state’s population hesitant to get a COVID-19 vaccine. On the site, a user can hover over states to view the vaccine-hesitant share of the population and the top three reasons respondents said they were reluctant to get a vaccine.
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* Economic Outlook *
Markets View Surging Inflation As “Transitory”
Despite the latest Consumer Price Index (CPI) figure increasing 5.0 percent year over year, reaching its highest reading since August 2008, the Federal Reserve and increasingly Wall Street are viewing this surge as transitory. Price changes in May’s CPI were heavily skewed to those sectors that were most heavily impacted by the pandemic (leisure/hospitality, travel…) while the categories of prices that have historically been highly correlated with underlying inflation were much more subdued. Consider, the reopening sectors, representing 20 percent of the CPI weightings, rose 2.5 percent while the other 80 percent of the CPI weightings rose 0.15 percent. Thus, the bulk of the May’s price increases were confined to just a few (re-opening) sectors. The new market acceptance of the “transitory” inflation view should take a lot of pressure off the Fed to move interest rates higher.
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Beyond Reskilling in Manufacturing (Deloitte). U.S. manufacturing has difficulty filling entry-level positions and finding skilled talent, according to the 2021 Deloitte and The Manufacturing Institute’s manufacturing talent study. Despite the growing use of industrial robots, the talent challenge is only expected to increase with an estimated 2.1 million unfilled manufacturing jobs by 2030. There is also rapid change taking place in manufacturing that will also likely alter the nature of jobs, creating new roles and transforming others. The figure illustrates how advancing digital transformation is expected to impact the work of an assembler, a machinist, and an industrial design engineer. It also highlights what skills and capabilities are likely needed for them to succeed in the factory of the future. The study includes suggested approaches to tackling these workforce shortages along with promising practices. The Connecticut Digital Credential Ecosystem Initiative, for example, includes a network of companies, colleges, government agencies, and other stakeholders helping to launch industry-validated credentials to support career pathways across Connecticut and the surrounding region. Participating employers will approve the knowledge, skills, and abilities for these credentials and build a recruitment and hiring pipeline for students who complete the course.
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U.S. and EU to Settle Trade Dispute and End Tariffs (New York Times). European Union leaders and President Joe Biden are working to end outstanding trade battles. In particular, the two sides are trying to resolve a fight over steel and aluminum tariffs imposed in 2018 and promise to remove these tariffs before the end of the year. Further, the allies agreed to resolve other outstanding disagreements, including a nearly two-decade old aircraft dispute. The U.S. and European Union agreed to a five-year truce over aircraft subsidies to Airbus and Boeing, ending a 17-year dispute that saw $11.5 billion in tariffs imposed on each other’s exports. The U.S. and the EU will also form a partnership aimed at reinforcing the supply of semiconductors in both regions. The plans are part of a broader EU-U.S. platform to collaborate on digital issues called the Trade and Technology Council. President Biden commented, “Strengthening the alliance will make it clear to Putin and to China that Europe and the United States are tight, and the G7 is going to move.”
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Opportunity Zone Home Prices Are Rising (Attom). Investing in opportunity zones is getting more expensive, as even the poorest neighborhoods are experiencing rising home prices brought on by the pandemic—driven by record-setting demand and low interest rates. According to an ATTOM Data Solutions report, median home prices are up in 75 percent of the country’s opportunity zones. Median prices rose in 78 percent of census tracts outside of OZs—only slightly more. The ATTOM study looked at 4,579 zones around the United States with at least five home sales in the first quarter of 2021. The number of homes priced below $150,000 also dropped. About 43 percent of homes for sale in OZs have median prices less than $150,000, down from 50 percent a year ago. Although the homes for sale in OZ areas are still quite affordable—especially when compared to non-OZ markets (national median price is $353,000). This price difference, along with the comparable price trend, shows there is continued interest among homebuyers in marginal areas. This bodes well for the redevelopment that opportunity zone tax breaks are designed to promote.
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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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Insights on Economic Opportunity and Inclusion (McKinsey & Company). Americans reported facing numerous barriers to economic opportunity and inclusion in the inaugural McKinsey American Opportunity Survey—among them, inadequate access to health insurance and physical and mental healthcare, as well as to affordable childcare. Many feel their very identity limits their access to jobs and to fair recognition and reward for their work. Most report their financial situations have deteriorated over the past year. Rural Americans are at a heightened risk of being left behind. Rural respondents were less willing than urban ones to say that they would move for work (22 percent versus 38 percent), switch industries (44 percent versus 52 percent), or change occupations (47 percent versus 52 percent). Rural workers were also less likely than urban workers to say they knew about growing industries, in-demand occupations, and the relevant necessary skills for those occupations. Rural respondents were also more likely to say that they and their families will have fewer economic opportunities over the next five years.
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Energy Storage for a Modern Electric Grid (National Conference of State Legislatures). A significant transformation of the electric grid is currently underway, driven by the rapid growth of new energy technologies providing consumers and utilities with an increasing number of options for generating, using, and managing energy. The grid is transitioning from a more static system with centralized electricity generation and management operations to one that is more dynamic and adaptable, where consumers also play a role in managing generation and consumption to help balance the grid. One game-changing technology that is part of this transformation is energy storage, which allows utilities, utility customers, and third parties to store or release electricity on demand. Energy storage includes an array of technologies, such as electrochemical batteries, pumped storage hydropower, compressed air, and thermal storage. In the past of few years, no electric resource increased its role in the U.S. electric grid as rapidly as energy storage. At the end of 2020, there was 10 times more battery energy storage than there was in 2014. Falling costs, regulatory changes, and state policies are expected to propel a rapid expansion of utility-scale installations over the next five years, to about 5,000 MW per year.
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Closing Digital Divide with Better Broadband Data (TechXplore). High-speed internet access has gone from an amenity to a necessity for working and learning from home, and the COVID-19 pandemic has more clearly revealed the disadvantages for American households that lack a broadband connection. To tackle this problem, Michigan State University researchers have developed a new tool to smooth the collection of federal broadband access data that helps pinpoint coverage gaps across the U.S. To date, Form 477 data remains the best publicly available data source regarding broadband deployment. The Federal Communications Commission requires internet service providers to report where they provide service to residential and business customers twice a year, via the standardized Form 477. However, a limitation of this data is that it does account for underlying population shifts. The researchers developed a procedure for aligning Form 477 data with census data to produce a Broadband Integrated Time Series (BITS). The BITS data will help better diagnose gaps in broadband availability.
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Incentive Evaluations Limit Fiscal Uncertainty, Improve Effectiveness (Pew Charitable Trusts). As more states across the country implement processes to regularly produce high-quality, rigorous evaluations of economic development tax incentives, lawmakers increasingly use findings from these reports to inform policies that ensure that incentives are effective, accountable, and fiscally sound. Hawaii, Kansas, and Montana joined the growing list of states that have begun releasing evaluations on a recurring schedule. Hawaii’s first report suggests establishing clear purposes and assessment criteria for new and existing expenditures to help measure success. Kansas’ Legislative Division of Post Audit made similar recommendations in its angel investor tax credit report. Montana’s revenue interim committee, which reviews select incentives, took steps to ensure that future lawmakers continue to receive valuable information about the use of various credits and how they function. These are a few examples of how evaluations can help states better direct investments to projects that are more likely to succeed and therefore provide a better return on investment.
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Kentucky Announces New Business Projects (Center Square). Kentucky officials announced four business projects that would bring more than $270 million in investments and create more than 500 jobs. Each project received preliminary approval for a combined $17 million in incentives during the Kentucky Economic Development Finance Authority meeting. Firestone Industrial Products Co. LLC, a subsidiary of Bridgestone Americas Inc., was among the projects approved. The company plans to create 250 new jobs at its automotive air springs manufacturing plant in Williamsburg in southeastern Kentucky. More than 500 workers are currently employed at the plant, which makes about 4 million parts annually. The company would add nearly 70,000 square feet of space to its existing 375,000-square-foot plant as part of the nearly $51 million expansion. State officials approved Firestone for up to $6.5 million in tax incentives over 15 years based on meeting investment targets, maintaining job levels, and offering an average wage and benefit package of at least $29 an hour. The authority also approved $6 million in incentives for Wieland North America Inc. to build a $100 million copper recycling plant in Shelby County. The company announced earlier this year its North American headquarters will be in Louisville.
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Oklahoma Incentive Evaluations Lead to Statutory Changes (Smart Incentives). Oklahoma has been assessing the state’s business incentive programs on a regular schedule since 2016. State legislators and officials from state agencies, especially the Department of Commerce, have taken the lead to use findings and recommendations from the Incentive Evaluation Commission to make changes that contain costs and improve outcomes for Oklahoma. As a result of their efforts, more than a dozen statutory changes have passed to improve incentive program performance. Among the statutory changes made to Oklahoma business incentive programs since 2016 include clarifying the definitions of qualifying construction costs and payroll on the Five-Year Ad Valorem Tax Exemption; adding an average annualized wage requirement in order for projects to qualify for the Governor’s Quick Action Closing Fund; extending the sunset date for the Oklahoma Aerospace Engineer Tax Credits; and eliminating population restrictions and reducing the carry forward period for the Affordable Housing Tax Credit.
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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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State Innovation and Growth with COVID Relief Funds (CNBC). The most recent COVID-19 relief bill sent billions of dollars to the states. This Op-ed from the Task Force on National Security and U.S. Manufacturing Base Competitiveness, sponsored by the Ronald Reagan Institute, identifies ways states can spur innovation and growth using relief funds. First, states should prioritize investments that drive innovation, including supporting “angel funds” for startups and catalytic capital funds to attract private investment to small- and medium-sized innovators. Second, take steps to renew America’s advanced manufacturing. Third, invest in infrastructure that can directly support innovation and advanced manufacturing. This includes having states looking abroad for examples, like Singapore, Taiwan, and South Korea, where governments have worked to establish stable tax, legal, and regulatory frameworks for business. Fourth, build the pipeline of talent that can sustain global leadership. States need to boost resources for STEM education in K-12 schools, create scholarship programs in traditionally underserved communities, and expand and improve upon continuing training and education programs, such as those at community colleges.
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Talent Development/Attraction
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Workforce Disparities Persist for Women, Black, and Latinx Engineers (Georgetown University). Engineering occupations are some of the highest-paying and most prestigious in the U.S. labor market, but they are also some of the least diverse. Of the nearly 1.7 million prime-age engineering workers in the United States in 2019, 81 percent were either White or Asian, and 84 percent were men. Women’s representation in engineering occupations has barely improved, increasing from 15 percent a decade ago to 16 percent today. Similarly, at the current rate, achieving racial equity in engineering could take 76 years for all Black and Latinx workers and up to 256 years for Black workers alone. The Black/African American share with bachelor’s degrees in engineering held steady at 4 percent over the last decade while the Latinx share increased somewhat. The figures argue for the need to do better at recruiting women, Black/African American students, and Latinx students to engineering majors.
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Accelerating Public-Sector Apprenticeships (Urban Institute). Public-sector apprenticeships are a powerful and underused tool for workforce and economic development. When state and local governments create apprenticeship programs for jobs where hiring is a challenge, those roles benefit from an infusion of talent. At the same time, apprentices benefit by earning wages, learning new skills, and building valuable work experience. This webinar, hosted by the Urban Institute and the Council of State Governments, discusses the advantages of public-sector apprenticeships, how states can apply to receive support to launch or expand such apprenticeships, and the benefits of participating in the apprenticeship consortium. This webinar features speakers from the Denver Public Schools, Urban Institute, Prince George’s County Public Schools, Council of State Governments, and former Kentucky Secretary of Education and Workforce Development.
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SEDE Network Updates
* SEDE International Insights Webinar Held *
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View Webinar
The SEDE network and the State International Development Organizations (SIDO) hosted a webinar on May 25, 2021, “Economic Development Strategies for Recovery and Growth: International Insights.” This webinar enabled state leaders to hear about strategies from economic development counterparts internationally about their plans for economic recovery from COVID-19 as well as their preexisting economic development initiatives. Speakers from three international jurisdictions (United Arab Emirates, Quebec Canada, Singapore) discussed their strategy or plan, actions being taken to implement priorities in the plan, as well as the funding framework and metrics enabling and tracking progress for the effort. The goal was to provide state economic development officials with examples to draw upon as you craft your own approaches here in the U.S.
Speakers:
United Arab Emirates: Mr. Saud Al Nowais, UAE Commercial Counselor to the United States
Quebec: Eric Marquis, Assistant Deputy Minister of Bilateral Relations, Quebec Department of International Relations
Singapore: Ih Ming Chan, Regional President for Americas, Economic Development Board of Singapore
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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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