Senior state executives representing more than 30 states joined a SEDE Network conference call on March 16 to share information about how they are addressing challenges from the Covid-19 virus. Several states talked about their strategies on many different topics of mutual interest. Notes on key issues and initiatives discussed during the call will be posted to the SEDE website at stateeconomicdevelopment.org asap.
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House Passes Coronavirus Relief Bill, Sending to Senate (CNBC). The House passed a coronavirus relief plan early Saturday after hours of talks between Democrats and the Trump administration on how to blunt the economic damage of the global pandemic. The chamber approved the 110-page bill to provide relief to consumers and workers walloped by the outbreak less than an hour after text was released. The measure passed in an overwhelming 363-40-1 vote. The legislation now heads to the Senate. The legislation:
• Requires private health plans to cover coronavirus testing at no cost, and allocates $1 billion for testing for uninsured Americans
• Ensures employers with fewer than 500 employees and government employers offer two weeks of paid sick leave. The provision expires at the end of the year
• Requires those same kinds of employers to provide up to 3 months of paid family and medical leave for people forced to quarantine due to the virus or care for children or family members because of the outbreak
• Offers payroll tax credits for employers providing those leave benefits
• Puts $1 billion into emergency state grants for providing unemployment insurance benefits. It includes $500 million for staffing and logistical costs for states, with an additional $500 million reserved for states that see a 10% increase in unemployment
• Puts $500 million into food assistance for low-income pregnant women and mothers with young children, $400 million into local food banks and $250 million into a senior nutrition program
• Suspends the Supplemental Nutrition Assistance Program work requirements for the duration of the crisis
The president also said he directed Treasury Secretary Mnuchin and Labor Secretary Scalia to issue regulations that will provide flexibility so that in no way will Small Businesses be hurt.
State Economic Performance
State Employment-to-Population Ratios (U.S. Bureau of Labor Statistics). The employment-to-population ratio is a macroeconomic statistic that measures the civilian labor force currently employed to the total working-age population. Iowa had the highest employment–population ratio in 2019, 68.5 percent, followed by Minnesota, 68.0 percent. Overall, 22 states and the District of Columbia had employment–population ratios in 2019 that were significantly higher than the U.S. ratio of 60.8 percent. The largest increases in employment–population ratios over the previous year occurred in Iowa (+1.5 percentage points), followed by West Virginia (+1.2 points) and New Jersey and Tennessee (+1.1 points each). Twelve other states also had significant increases in their ratios. Compared with other metrics, the employment-to-population ratio is not as affected by seasonal variations or short-term fluctuations in the labor market. As a result, it is often considered to be a more reliable indicator of job shrinkage or growth than the unemployment number.
Topics and Trends
A Talent Road Map for the Automotive Industry (McKinsey & Company). The automotive sector is experiencing unprecedented disruption through changing technologies, business models, competitors, and buying behaviors. McKinsey’s Center for Future Mobility predicts that by 2030, up to 30 percent of a vehicle’s total costs are expected to be driven by software and electronics, but only 9 percent of automotive suppliers surveyed say they prioritize recruiting for software-architect and -developer roles and for system-integrator roles. This report shares six best practices for talent management in the automotive-supply industry. 1. Create a group of 3 (G3)—a close collaboration of the CEO, CFO, and chief human resources officer (CHRO). 2. Reinvent and elevate the HR function. 3. Identify the critical two percent of roles that create outsized value. 4. Transition to an agile organization to rapidly assemble small, cross-functional teams. 5. Leverage new digital and analytical tools across all elements of workforce planning. 6. Build the workforce of the future informed by a deep understanding of the skills the organization will need to execute its strategy. These best practices can provide a road map for setting an organization on a path to win, even amid disruption.
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US Trade Policy Update for State Economic Development Executives
March 24, 2020
2:30 PM – 3:30 PM EDT
Passage of the USMCA, progress on China, new opportunities emerging with the UK, the European Union, India…and most recently, the Coronavirus pandemic. The landscape for trade and tariffs is changing quickly. As state economic development leaders, it is critical to understand the lay of the land and the implications for attracting foreign direct investment, promoting exports, and supporting growth opportunities for existing companies. Join us for this webinar that will provide an update and overview of the US Trade situation: what’s happened, what it means, and implications for state strategies.
Declining Business Sentiment, Not Trade Uncertainty, Explains Slowdown (Federal Reserve Bank of New York). Many analysts contend that an increase in trade policy uncertainty leads to a decrease in business investment and a contraction in industrial production. A new study by the Federal Reserve Bank of New York suggests that it may instead reflect the decline in business sentiment. Using data from 1985 to 2019, the findings show that while trade policy uncertainty negatively impacts economic activities abroad, it does not cause U.S. business investment to decline. In contrast, a negative business sentiment shock causes a decline in U.S. and foreign production as well as U.S. business investment. The study concludes that recent patterns in financial conditions and economic activity are more in line with the effects of a deterioration of U.S. business sentiment than of trade policy uncertainty. As a result, the mitigation of trade tensions with China might not lead to a rebound in economy activity if business sentiment does not recover.
Vermont Considers $20,000 to New Workers in Opportunity Zones (VT Digger). The Vermont Senate Committee on Economic Development, Housing and General Affairs will hear on the impact of S.331, a bill that contains measures aimed at helping people with the burden of student loan debt. The bill’s language describes historic levels of student debt as possible reasons for less home ownership nationwide, especially among the young. It calls on the Commerce and Community Development agency to work with the Vermont Housing Finance Authority, or VHFA, to design and implement a program that would provide down payment assistance to qualifying buyers. Buyers working in an area where Vermont’s workforce shortage is most severe would get priority. They would have to buy homes in Vermont’s “opportunity zones,” designated areas where investors can receive capital gains tax breaks. The down payment assistance would take the form of five annual $4,000 payments that would be sent directly to the lenders holding the buyers’ student loans. To view the Final Regulations on Opportunity Zones issued by the U.S. Treasury Department and IRS, click here.
Construction Begins on $200M Mixed-Use Project in Illinois Opportunity Zone (Multifamily Biz). The Habitat Company has announced construction is underway at Ogden Commons, the $200 million mixed-use project in Chicago’s North Lawndale neighborhood being developed in a public-private partnership. Located in a Qualified Opportunity Zone, the 10-acre development will offer 120,000 square feet of commercial and retail space and over 350 mixed-income housing units. Ogden Commons will be located on land that once was occupied by the Chicago Housing Authority’s former Ogden Courts and Lawndale public housing developments. Through a combination of debt and Opportunity Zone equity, PNC Bank funded $15 million of the $22 million development cost for phase one at Ogden Commons. It is hoped the project will create a positive ripple effect in the neighborhood for years to come. Not only will it bring the first new outpatient facilities to the area in more than 20 years, but the project will also add new restaurants, a bank, office space and much-needed affordable housing – all while creating jobs and building the local economy. For more information on Opportunity Zones, CDFA has extensive resources available, click here.
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.
America After Climate Change, Mapped (McHarg Center for Urbanism and Ecology). According to GDP projections through 2099, more than three quarters of U.S. counties will be suffering economically because of the damage climate change wreaks; about a quarter will benefit. The losses are largest in the regions that are already poorer on average (Southern, Central, and Mid-Atlantic), increasing inequality as value transfers to the Pacific Northwest, Great Lakes Region, and New England. These grim economic projections are part of the report, The 2100 Project: An Atlas for A Green New Deal, by the University of Pennsylvania’s McHarg Center for Urbanism and Ecology. The project visualizes how the warming world will reshape the United States and recommends bold policies like the Green New Deal to mitigate the effects.
Widespread Support for Pro-Innovation Bayh-Dole Law (Townhall). Enacted forty years ago, Bayh-Dole was a way to super-charge the American innovation system by allowing the research institutions to hold the patents arising from federally funded research. For decades this has enjoyed broad, bipartisan support because it was recognized that just throwing money around isn’t a solution. If the government keeps the patents on federally funded research, companies aren’t going to invest in transforming that research into a marketable product. This system has been an unqualified success. Much of the federal research money flows to universities, which in turn license their patented discoveries to companies that see a chance for a beneficial consumer product. All of this is threatened if the “march-in” provision is abused causing the private sector to be hesitant or unwilling to license federally funded inventions from universities.
Understanding the True State of Connectivity in America (National Association of Counties). Broadband is imperative to building resilient and future-ready communities in the 21st century. Lack of reliable broadband is a major economic barrier and an issue of socioeconomic equality. Over the past year, TestIT users from across the country have helped paint a clearer picture of connectivity in America. Through the app, it was discovered that over half of our nation’s counties – on average – are experiencing Internet speeds below 25 megabytes per second (mbps) which is the federal definition of minimum broadband standards. Additionally, 65 percent of counties are experiencing service levels below what has been reported by the industry. The discrepancies lie between the maximum advertised speeds – required by the FCC’s Form 477 process – and the actual levels of Internet service experienced by users. Without access to high-speed internet, many of our rural and underserved communities are becoming increasingly isolated and left behind.
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Incentives in Action
JobsOhio to Invest $100 million in Cincinnati Innovation District (Cincinnati Business Courier). JobsOhio, the state’s economic development corporation, has committed to invest up to $100 million to improve talent development and accelerate research and development initiatives at the University of Cincinnati and Cincinnati Children’s Hospital with the establishment of the Cincinnati Innovation District. JobsOhio’s initial investment will be used to raise the number of degrees in STEM fields awarded by UC to 15,000 over the next decade and the amount of combined executed federal research at UC and Cincinnati Children’s to $2 billion in the same time period. Today, UC and Cincinnati Children’s contribute more than $450 million annually in research. Future investments will be used for placemaking initiatives within the Cincinnati Innovation District. JobsOhio projects the overall district investments will result in the creation or attraction of 20,000 high-skilled jobs and an annual economic impact of $3 billion.
Washington Rolls Back Boeing Tax Break (Seattle Times). The Washington Legislature has approved a bill to repeal a tax break for Boeing, a measure that was requested by the aerospace giant to resolve a long-running international trade dispute. Boeing wanted the repeal to head off retaliatory trade tariffs. The state’s Business & Occupation (B&O) tax preference for aerospace manufacturers has allowed Boeing and aerospace businesses to pay a lower state tax rate compared to other manufacturing companies. Right now, 335 companies benefit from the B&O aerospace tax preference, but Boeing is by far the biggest beneficiary having saved hundreds of millions of dollars since 2003. The tax break was extended to 2040, helping convince the company to build the 777X in Everett, Washington. Concerns were raised that World Trade Organization tariffs could ripple out far beyond Boeing, ensnaring other Washington products like wine. The measure would allow a return to a preferential tax rate if an agreement between the United States and European Union settles their disagreement in a way that allows for some tax incentives.
* SEDE Webinar Recording Now Available *
Rethinking Economic Development Incentives for the 2020’s
State economic development leaders across the nation are being challenged to examine and update existing incentive policies and practices to provide for more transparency and for more equitable and widely shared growth. Listen to the March 10, 2020, SEDE Network webinar on Rethinking Economic Development Incentives for the 2020’s, where Smart Incentives Founder Ellen Harpel and CREC CEO Ken Poole discussed strategies to review and redesign incentives to better address rural development, tight labor markets and talent shortages, equity and community considerations, and the trade-off between quality and quantity of incentives offered. The presentation also included key trends across states and a Q&A discussion of key questions that state leaders are facing in their work. Wesley White, Deputy Cabinet Secretary at the West Virginia Department of Commerce, moderated the webinar.
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.
New Growth Opportunities
Millennials Find New Hope in the Heartland (Heartland Forward). Millennials are the largest generation and they represent the largest portion of the American workforce. In the aftermath of the Great Recession, there was substantial evidence that tech fueled growth on the coasts lured highly educated Millennials from the Heartland and kept many from the coasts at home. Leading technology innovation ecosystems on the coasts, such as Silicon Valley, San Francisco, Seattle, Portland, Raleigh, Boston and D.C., acted as magnets for young talent. If Millennials do not find the Heartland more attractive, even the most well-conceived and articulated economic development strategies will be rendered mute. According to a new study, there is evidence that Heartland locations are doing better at retaining and attracting members of the Millennial generation with three of the nation’s ten best performing metropolitan areas for Millennials and five in the top twenty.
States Divert to Telework Amid Coronavirus Concerns (Government Technology). Given the current pandemic, how long the public will be asked to stay home is anyone’s guess, but the question may be especially pertinent for state and local governments, whose preparedness for telework at scale is highly variable. The state governments of New Jersey and North Carolina recently issued recommendations for state agencies to implement work-from-home policies to curb the spread of COVID-19 (the new coronavirus). Other governors across the country have been making moves to slow the virus’ transmission as well. For some state and local governments, the evolving pandemic will be a test of telework systems they’ve been developing for such contingencies; for others, it may be a logistical hurdle that proves the need for such systems. The challenges of managing a remote workforce are likely to be greater when decisions about telework are made quickly, while the impacts to certain services will be difficult to mitigate without bodies in an office.
Age-Friendly Employer Certification to be Offered (Age Friendly Foundation). An advocacy campaign against age discrimination has debuted an “Certified Age-Friendly Employer” initiative that recognizes companies in Colorado that support employees aged 50 and older. The state’s labor force participation of those aged 55 and older is nearly six percentage points higher than the national average, yet labor markets remain tight. Mature workers generate measurably higher customer satisfaction rates and remain three times longer in their jobs than younger workers, reducing the costs associated with hiring new workers. The special designation comes from a confidential, in-depth analysis, based on interviews from an authorized representative like Changing the Narrative Colorado. Among the employer policies making workplaces more age-friendly include: investing in training for people of all ages; flexible schedules; including age in diversity policies; removing age-identifiers from applications; and encouraging reciprocal mentoring so that younger people and older people can learn from each other.
SEDE Network Updates
* Join Us for our Upcoming SEDE Events *
US Trade Policy Update for State Economic Development Executives
Tuesday, March 24, 2020
2:30 – 3:30 pm ET
Passage of the USMCA, progress on China, new opportunities emerging with Britain, India…and now the Covid-19 virus impacting everyone. The landscape for trade and tariffs is changing quickly. As state economic development leaders, it is critical to understand the lay of the land and the implications for attracting foreign direct investment, promoting exports, and supporting growth opportunities for existing companies. Join us for this webinar that will provide an update and overview of the US Trade situation: what’s happened, what it means, and implications for state strategies.
Christopher Sands, Director, Woodrow Wilson International Center for Scholars’ Canada Institute
Jennifer Hillman, Senior Fellow, Trade and International Political Economy, Council on Foreign Relations
Andy Karellas, Executive Director, State International Development Organizations
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The SEDE Network Steering Committee includes: Stefan Pryor (RI), Chair; Val Hale (UT), Vice Chair; Julie Anderson (AK); Dennis Davin (PA); Jennifer Fletcher (SC); Kurt Foreman (DE); Joan Goldstein (VT); Manuel Laboy Rivera (PR); Jeff Mason (MI); Kevin McKinnon (MN); Don Pierson (LA); Mike Preston (AR); Sandra Watson (AZ).
For further questions on the content in this Bulletin or for information on the SEDE Network contact Marty Romitti, CREC Senior Vice President, at email@example.com