State Economic Development Bulletin – November 2021

 

<!–

State Economic Development Bulletin

<!–
<!–

Latest News

<!–
<!–

State Uses of Coronavirus Fiscal Recovery Funds (National Association of State Budget Officers). The Coronavirus State and Local Fiscal Recovery (CSLFR) Funds, authorized by the American Rescue Plan Act (ARPA) of 2021, allocated $195.3 billion for states and the District of Columbia and $4.5 billion for territories. NASBO has compiled links to recovery plan performance reports for 39 states, the District of Columbia, and two territories. A review of the publicly available recovery plan reports reveals the median percentage of funds allocated was 41 percent. At least 31 out of 39 states reported some allocations of their fiscal recovery funds for specific uses. Revenue Replacement has claimed the largest share of total funds allocated, at 32 percent, followed by Negative Economic Impacts at 27 percent, Infrastructure (broadband, water, and sewer projects) at 16 percent, and Services to Disproportionately Impacted Communities at roughly 15 percent of total funds allocated. Among states that did not report on specific planned uses, most indicated they would be making some fund allocations this fall or during 2022 legislative sessions. 

<!–
<!–

Related note: The SEDE Network is planning a December 2021 webinar on How New EDA Grant Funds Will Be Used: Identifying Priorities, more details to come.

<!–
<!–

* State Small Business Credit Initiative Program *

U.S. Treasury Issues SSBCI Program Implementation Guidance

On November 10, 2021, the U.S. Department of the Treasury issued capital program policy guidelines for the State Small Business Credit Initiative (SSBCI) Program. The new version of the program will provide a combined $10 billion to states, the District of Columbia, territories, and Tribal governments to empower small businesses to access capital needed to invest in job-creating opportunities as the country emerges from the pandemic. For more information on the SSBCI Program, click here.

Upcoming Webinars

SSBCI Guidance Webinar for States, the District of Columbia, and Territories

Thursday, November 18, 2021 at 3:30 p.m. ET

https://ustreasury.zoomgov.com/j/1618837227; no registration required.

SSBCI Guidance Webinar for Tribal governments

Friday, November 19, 2021 at 3:30 p.m. ET

https://ustreasury.zoomgov.com/j/1617062960; no registration required.     

 

Related Note: The SEDE Network held a SSBCI webinar on November 2, 2021 – the recording and slides are available on the SEDE website, www.stateeconomicdevelopment.org.

<!–
<!–

State Economic Performance

<!–
<!–

More Jobs Than Jobless in 42 States (Pew Charitable Trusts). A record number of job openings and fewer workers to fill them have left most states with more available jobs than people looking for work, according to analysis of federal statistics from August 2021, the latest available. The ratio of jobs-to-jobless is almost 3 to 1 in Nebraska and more than 2 to 1 in Utah, New Hampshire, Vermont, Idaho, Georgia, Alabama, and Montana. In most states, the ratio is higher now than it was before the pandemic. There are just eight states with more unemployed workers than job openings: Hawaii, followed by California, Connecticut, New York, Illinois, New Mexico, New Jersey, and Nevada. The labor shortage is most acute in sectors with relatively low pay and high public contact, such as transportation, food service, and hospitality. 

<!–
<!–
<!–
<!–

* Economic Outlook *

The Economic Case for Equity

Leaders across government and industries are eager to create a more equitable workforce and society. Research by the Federal Reserve Bank of San Francisco investigates how equity creates economic gains for everyone. These gains are in the trillions of dollars of GDP. How can states and other stakeholders use these findings to shift the narrative and create a more equitable and prosperous future for everyone? Laura Choi, Senior Vice President for Public Engagement at the Federal Reserve Bank of San Francisco, reviews the research findings and makes the economic case for equity at the recent Community Indicators Consortium (CIC) Impact Summit. Her remarks begin at the 7:50 minute mark of the video. 

<!–
<!–

Topics and Trends

<!–
<!–

Industry Watch

<!–
<!–

Promising Prospects for Productivity Growth (McKinsey & Company). Evidence from some companies and sectors suggests that the United States can rebound from the COVID-19 pandemic with renewed vigor. Indeed, the pandemic accelerated trends that will likely have persistent effects with profound economic implications, hastening the potential for productivity gains—even in the sectors that have historically been slow to change. For example, in retail, except for e-commerce players, companies had been slow to adopt digital sale strategies, doing so mostly to complement Main Street retailing. That changed abruptly during the pandemic. It will take more companies and more sectors contributing to productivity to drive national-level productivity. If all US companies and key large sectors adopt the range of digital and productivity acceleration already seen during the pandemic, the nation could see around 1–1.5 percent higher growth across sectors over the next three years.

<!–
<!–
<!–
<!–

Trade/Tariffs

<!–
<!–

U.S. Needs Worker-Centric Digital Trade Agenda (The Hill). The time is ripe for the U.S. to negotiate or join a digital trade agreement that advances U.S. internet standards of openness and democracy, and contains language committing parties to upholding the highest labor standards at home and abroad. The Biden administration has pledged that new trade policies and agreements must be worker-centric. This term includes more robust labor protections but is part of a larger initiative to develop trade policies that allow the balance of benefits to accrue more to workers and less to large corporations. New digital trade policies can be crafted to fit into this framework, addressing the needs of workers and small businesses in the digital economy A worker-centric digital agenda starts at home by addressing America’s deep digital divide, modernizing the Trade Adjustment Assistance (TAA) program to meet the needs of digital workers who lose their jobs because of trade, and ensuring gig workers have the same labor rights and benefits as traditional employees. In addition, facilitating access to technology and training for small business owners is an important way to build a more inclusive economy.

<!–
<!–

Opportunity Zones

<!–
<!–

IRS Faces Opportunity Zone Compliance Challenges (U.S. Government Accountability Office). According to the Internal Revenue Service, over 6,000 Qualified Opportunity Funds invested about $29 billion in Opportunity Zones through 2019. The incentive attracted investment in housing, renewable energy businesses, and other projects. However, the IRS is going to have a hard time ensuring compliance with the rules for opportunity zones, since much of the data is unavailable, even as a key deadline for the program is ending in December 2021. The report, released by GAO, found the IRS has developed plans to ensure qualified opportunity funds, which invest in opportunity zones, and investors are complying with the tax incentive’s requirements. However, the IRS faces challenges in implementing these plans as some data is not readily available for analysis. In addition, qualified opportunity funds have attracted investments from high-wealth individuals, and some of the funds are organized as partnerships with hundreds of investors. The IRS considers both groups to be high risk for tax noncompliance. As a result, the IRS may be unable to focus its tax compliance efforts effectively.

<!–
<!–

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.

<!–
<!–

Inclusive Growth

<!–
<!–

International Migration Outlook (Organization for Economic Cooperation and Development). There are nearly 45 million foreign-born persons in the United States (13.7% of the population). The U.S. received 1,031,000 new immigrants on a long-term or permanent basis (including changes of status) in 2019, down 6% compared to 2018. This figure comprises 7% labor migrants, 75.3% family members (including accompanying family), and 10.4% humanitarian migrants. Around 364,000 permits were issued to tertiary-level international students and 766,000 to temporary and seasonal labor migrants. Mexico, China, and India were the top three nationalities of newcomers in 2019. Overall, the main countries of birth for the existing U.S. foreign-born population: Mexico (25%), India (6%), China (5%). Among the top 15 countries of origin, Vietnam registered the strongest increase (5,800) and Cuba the largest decrease (-36,000) in flows to the United States compared to the previous year. Emigration of Americans to OECD countries decreased by -5% in 2019, to 113 000. Approximately 21% of this group migrated to Japan, 15% to the United Kingdom, and 9% to Germany.

<!–
<!–

Innovation

<!–
<!–

Industry 4.0 Technologies in Food Manufacturing (NIST Manufacturing Extension Partnership). The innovations and technology associated with Industry 4.0 are making it easier for small and medium-sized manufacturers to overcome operational obstacles and industry challenges. Typically, in food manufacturing, additional employees are needed during expected peaks – usually driven by seasonal demand. Yet, these manufacturers are now finding themselves unable to fill positions needed for seasonal workers, let alone regular shifts. Task automation equipment and sensors to monitor machine maintenance can help food manufacturers ride the waves of labor shortages both now and in the future. Similarly, errors in food processing are the cause of more than 50% of the industry’s recalls. For employees on the preparation or inspection line, an augmented reality headset can provide a step-by-step list of ingredients or tasks that can be superimposed for the employee to follow, helping to reduce the risk of missing important steps. Not only does this prevent sickness in customers, but also helps maintain plant profitability.

<!–
<!–

Infrastructure

<!–
<!–

What’s in the Bipartisan Infrastructure Bill (National Conference of State Legislatures). The recently passed $1.2 trillion Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Deal) focuses on investments in roads, railways, bridges, broadband internet, and other “hard infrastructure.” The bill was separated from what President Biden has referred to as “human infrastructure,” including money allocated for childcare and tax credits for families. The package is financed through a combination of funds, including repurposing unspent emergency relief funds from the COVID-19 pandemic, and strengthening tax enforcement for cryptocurrencies. While negotiators said that the cost of the plan would be offset entirely, the Congressional Budget Office predicted it would add about $256 billion to projected deficits over 10 years. For the breakdown of spending by state, click here.

<!–
<!–

Deal Makers

<!–
<!–

Incentives in Action

<!–
<!–

* SEDE Network Roundtable *

Integrating Equity into Incentive Metrics

The State Economic Development Executives (SEDE) network, Center for Regional Economic Competitiveness (CREC), and Smart Incentives held a roundtable on November 9, 2021, to discuss emerging approaches to measuring and reporting on diversity, equity, and inclusion (DEI) impacts within incentive programs. State and local economic development organizations are striving to make their financing and incentive programs more equitable. Stakeholders are asking for new metrics and public reporting on program outcomes to assess how well these efforts are working and to understand their impact on communities. Listen to the recording by clicking on the Integrating Equity into Incentive Metrics link above. For the PDF to the PPT presentation, click here.

<!–
<!–
<!–
<!–

Tri-State Leaders Revamp Incentive Programs (Sioux City Journal). At the Siouxland Initiative’s annual luncheon, Iowa Economic Development Authority Director Debi Durham, Nebraska Department of Economic Development Director Tony Goins, and Chris Schilken, deputy commissioner for the South Dakota Governor’s Office of Economic Development, said they have revamped their incentive programs to focus on higher-paying jobs. Nebraska and South Dakota now require expanding employers to pay at least $20-$25 an hour to qualify for state incentives. Iowa’s minimum wage for incentivized jobs is $28 an hour. The states are also working on strategies and initiatives to help employers with labor shortages. To not create more competition for an already scarce labor pool, the economic development leaders said the three states are prioritizing expansions by existing employers. For instance, Durham noted 85 percent of the projects the Iowa Economic Development Authority is pursuing are from firms already in the state.

<!–
<!–

Pennsylvania Incentives Attach Higher Wages, Sick Pay (Carlisle PA Sentinel). In a stalemate with lawmakers over raising the minimum wage or requiring companies to have paid sick leave, Pennsylvania Governor Tom Wolf will impose both requirements by executive order on companies getting loans, grants, or tax breaks from the state. The state annually budgets for tens of millions of dollars in grants, loans, and tax breaks for companies that make certain promises to expand in Pennsylvania. The minimum wage that companies receiving state incentives must pay is $13.50 an hour, rising to $15 an hour on July 1, 2024. State contractors already must pay that amount, under a prior executive order signed in 2016. The sick pay requirement has no required time frame attached to it. Philadelphia and Pittsburgh have ordinances requiring paid sick leave for companies doing business in those cities. 

<!–
<!–

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

<!–
<!–

America’s Entrepreneurial States (Heartland Forward). Supporting entrepreneurs is an essential strategy for growing and diversifying a state’s economy. This has always been important but even more so now as we face the realities and ramifications of COVID-19. For economic developers, policymakers, teachers, universities, and even small business owners in states, most especially those lagging in support of entrepreneurs, it will be critical to prepare people, particularly women and those with diverse backgrounds, to pursue and participate in creating a more equitable economy. The Entrepreneurial Capacity Index serves as a tool to monitor progress as states build entrepreneurial ecosystems to capture job and economic development opportunities provided by young, dynamic firms. California is first in entrepreneurial capacity—combining high scores on Main Street and knowledge-intensive entrepreneurship. It also has the second-highest value of early-stage deal flow and is third in the number of deals, both adjusted for population. New York, Utah, New Jersey, and Colorado follow.

<!–
<!–

Talent Development/Attraction

<!–
<!–

People Not Looking for Work Because of COVID-19 (Bureau of Labor Statistics). In October 2021, 7.9 percent of people who were not in the labor force but wanted to work were prevented from looking for a job because of the COVID-19 pandemic. This was down from 52.6 percent in May 2020, the first month these data were collected. To be counted as unemployed, a person must be actively looking for work or on temporary layoff. A smaller percentage of people ages 16 to 24 did not look for work because of the pandemic (4.8 percent), compared with people ages 25 to 54 (9.1 percent) and those age 55 and older (8.6 percent). Women who wanted a job were more likely than men to be prevented from looking for work due to the pandemic. These data are from the Current Population Survey.

<!–
<!–
<!–
<!–

Not Enough Truckers in America’s Supply Chain (New York Times). Truck drivers have been in short supply for years, but a wave of retirements combined with those simply quitting for less stressful jobs is exacerbating the supply chain crisis in the United States, leading to empty store shelves, panicked holiday shoppers, and congestion at ports. Delivery times have stretched to months from days or weeks for many goods. The American Trucking Associations estimates the industry is short 80,000 drivers, a record number, and one that could double by 2030. In response, companies have raised their wages – the median wage for commercial truck drivers is $47,130. Earnings for long-distance drivers have increased more than 20 percent since the start of 2019. Trucking companies may want to consider greater investments in recruiting women and people of color. Only 7 percent of truck drivers are women and 40 percent are minorities. Increasing the weight limits for trucks to haul more freight and allowing people as young as 18 to drive interstate routes are further solutions to the labor shortage.

<!–
<!–
<!–
<!–

* SEDE Member Profile *

<!–
<!–

Julie Anderson, Commissioner, Alaska Department of Commerce, Community, and Economic Development

<!– <!–

Julie Anderson is Commissioner of Alaska’s Department of Commerce, Community, and Economic Development (DCCED). Commissioner Anderson has experience in both private and public sectors with a diverse background in most of the core sectors in Alaska. Increasing the strength of the economy and putting Alaskans to work is a high priority. Commissioner Anderson previously served as the chair of the Anchorage Chamber of Commerce and is the owner of Denali Management Solutions. Prior to that she worked at Alyeska Pipeline as a technical business strategy manager. She holds a Bachelor’s degree in business with an emphasis in international management from the University of Alaska Fairbanks, and a Master’s degree in business administration from the Thunderbird School of Global Management.

<!–
<!–
<!–
<!–

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). 

<!–
<!–

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.

<!–