Snowpocalypse! The Economic Tyranny of Snowstorms

by Dan Stevens 17. February 2015 11:32

After a series of especially inconvenient snow storms here in the northeast, it’s worth taking a look at how such events impact the economy—for better and for worse. The (economic) forecasts are typically dire with predictions totaling into the billions of dollars for major storms that ravage the major metro areas of the northeast. Consider one recent prediction that a two-day shutdown in the region would do $16 billion in economic damage. Yet most of these predictions assume that economic activity lost during the storm is forever wiped away. A more nuanced look shows that much activity is simply delayed, while in fact, some economic activity really is lost for good.

Stores are generally empty during blizzards. That’s a fair assumption, but that sales that would have occurred are lost off the year’s balance sheet is not. Consumer purchases are typically just put on hold until reasonable conditions return. If a snow storm hits on the day you were planning to buy a microwave, chances are you’ll still be buying that microwave in the near future. The same principle holds true for purchases made by businesses. Taking a one day or one week look at the impact simply ignores the fact that spending is “made up” later on.

 

It’s also important to consider that people work from home during major snow events. As one TIME article put it, “just because people don’t make it to work doesn’t mean work doesn’t get done.”1 In the digital era it’s easy to telecommute from home, especially for white collar professionals. Economic cost estimates of snowstorms also fail to account for the fact that workers can make up for lost time in other ways like working longer hours.

 

Yet it’s important to note that some economic activity is lost. Restaurants are typically hit hard because would-be patrons substitute meals out for food at home. The impact to retailers and restaurants is also dependent on the timing of storms. Purchases are not made uniformly throughout the week and an early week snowstorm will do less damage than one that shows up on Friday.

 

Storms can also reduce wages and earnings. While salaried workers receive their full paycheck regardless of Mother Nature, hourly workers forced to stay home lose those wages, which then cannot be spent in the economy. One study found that snow-related shutdowns hurt hourly workers the worst, “accounting for almost two thirds of direct economic losses.”2 Some workers have the opportunity to make up hours, others do not.

 

A big enough snowstorm can also cause enough logistical difficulties for the movement of goods that an impact to GDP (economic output) can be measured. Consider this example in a recent article about the winter of 2013-2014 “when a series of severe snowstorms across America helped the economy shrink by 2.1% in the first quarter of 2014." In that instance, the bad weather was persistent enough to mess with supply chains. Trucks and air freight couldn’t get to their destinations, mucking up inventory management. That led not only to fewer consumer purchases, but also to companies buying less than they otherwise would.”3

 

Now what about those massive municipal costs associated with snow storms? They are typically expressed as an economic loss, but there is a flip side. For example, snow removal costs are often cited, but consider where that money is going: into the pockets of snow removal crews, not buried in a snowbank. That money will circulate through the economy as those workers make purchases that support businesses and their employees. To consider the net economic impact of spending on snow removal it’s necessary to compare that benefit (dubbed “the snow stimulus” by one writer4) to the cost.

 

So what is the bottom line when it comes to measuring the economic impact of snowstorms? Summed up aptly by an economist in a recent Fortune article, “it’s more an art than a science.”5

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Maximizing the Return on Incentives

by Camoin Associates 13. February 2015 17:51

Incentives are a prevalent tool in economic development practice, yet two central questions remain: how can the return of these investments be calculated, and how can the return be increased?

 

Our own Jim Damicis contributed to an IEDC report on maximizing communities’ return on incentives. The report, entitled “Seeding Growth: Maximizing the Return on Incentives” presents practitioners with four models of return that can be implemented, and then describes in detail the methods of undertaking the calculations that are critical to accurate results. The report also offers practitioners guidelines that can be used to increase the return of incentives, including clearly defining objectives, setting criteria for achieving objectives, and rewarding companies that meet and exceed their commitments.

                                                           

The report is available here to IEDC members.

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Featured Indicator: Why Are Young Men More Likely to Live at Home?

by Tom Dworetsky 13. February 2015 16:54

New data issued by the Census shows a continued upward trend in the share of older Millennials who are living at home with their parents. The percentage of Americans aged 25 to 34 who lived at home reached 14.7% last year, up from a low of 10.2% in 2003. For younger Millennials, the upward trend seems to have reversed slightly, with the share of those between 18 and 24 living at home having fallen to 54.9%, down slightly for the second consecutive year after peaking in 2012 at 56.1%.

 

Given the state of the economy in the last several years, this trend is no surprise. What’s striking about this data is the difference between men and women. In 2014, almost 18% of men between 25 and 34 lived at home, compared to just 12% of women. That means that men were 1.5 times more likely than their female counterparts to live with their parents. This gap has remained fairly consistent for at least the last 20 years, so this is nothing new, but why is this the case?

 

 
Could economic factors explain the difference?

Are young men more likely to live at home because they are more likely to be unemployed? The 2014 seasonally-adjusted average quarterly unemployment rate for men ages 25–34 was 6.4%, while for women it was slightly higher, at 6.6% (Source: BLS). So that doesn’t explain it.

 

Moreover, the labor force participation rate (see last month’s indicator) for men in this age group was 88.7%, while for women it was quite a bit lower, at 73.9% (Source: BLS). With women LESS likely to be part of the labor force, we might expect that they would be MORE likely than men to live at home, but this is not the case.

 

So, if this gap can’t be explained fully by economics, there must be social factors at play. One potential explanation is the difference in marrying age (and by extension, cohabitation age, and age of forming intimate partnerships in general) between men and women. According to 2013 ACS data, the median age at first marriage was 29.4 for men, compared to 27.4 for women. Women get married earlier, so it follows that they would leave their parents’ homes earlier to form their own households, as well. Forty-two percent (42%) of women between 25 and 34 were married with their spouse present in the household, compared to 34% of men.

 

How does the U.S. stack up to other countries?

While the number of American Millennials living at home is on the rise, the U.S. is still on the low end of the spectrum when compared to European countries. Data from Eurostat shows that, for the 31 European countries for which 2013 data was available, the average share of European young adults aged 25 to 34 living at home was 30.2%. This is more than double the 2013 U.S. rate (13.9%)!

 

Seven countries had rates below that of the U.S., with the Scandinavian countries boasting the lowest rates. Denmark had the bottommost rate—only 1.4% of Danish young adults live with their parents. At the other end of the spectrum were the countries of Eastern Europe and the Balkans, with Croatia, Slovakia, Serbia, Greece, and Bulgaria all with rates between 50% and 60%.

 

Despite this broad range across countries in the share of young adults living at home, all 31 European countries had one thing in common: Men were more likely than women to live with their parents. Across countries, men were at least 1.3 times more likely to live with their parents, and in some countries, the gap was substantially higher. In general, the difference was most pronounced in Northern Europe. In the Netherlands, for example, 10.5% of young adults overall lived with their parents, but men were 3.3 times more likely than women to do so. In Germany, men were 2.2 times more likely to live at home. The 31-country average was 2.0. Recall that the ratio in the U.S. is 1.5.

 

I came across a few anecdotal reasons in my research that could explain why Millennial men are more likely to live at home. It may be true that parents tend to give their sons more freedom than their daughters, so it’s easier for a young man to live at home and still feel independent. In addition, in certain households, adherence to traditional gender roles might mean that sons are expected to do less housework than daughters, and so are more likely to stay at home.

What other factors do you think might be contributing to this phenomenon in the U.S. or globally? Post your thoughts in the comments!

 

U.S. Data is from the Census Bureau’s Current Population Survey – Annual Social Economic Supplements. It is important to note that unmarried college students living in dormitories are counted as living in their parental home in CPS data.

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The “secret” to a good economic impact analysis

by Christa Franzi 13. February 2015 16:35

Economic impact analysis looks at the effect of a project or event on the economy of a specified geography. We measure this effect in jobs, sales, and earnings created or lost. What we are really measuring is “change in final demand,” which is essentially money coming in from somewhere outside of your community.

 

Some may debate over which economic impact model is the best, but I’ll let you in on a little secret: the most important component of any good economic impact analysis has nothing to do with which model you use. The single biggest pitfall of many impact studies is failing to correctly calculate “net newwhen thinking about change in final demand. Net new is the change in final demand once you have eliminated and accounted for all other changes. In other words, you have estimated which jobs would occur in your community regardless of the project.

 

Last week, Tom Dworetsky and I had a blast chatting about this topic with a group of Siena College students taking part in an Economics of Travel and Tourism Course. Check out our presentation slides for a step-by-step guide to economic impact analysis.


 

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The Disconnect between Education and Workforce Development, Part III: The Workforce Innovation and Opportunity Act of 2014 (WIOA)

by Colleen LaRose 13. February 2015 16:33

So far we’ve covered the history of workforce development up through the Workforce Investment Act. Click for Part I and Part II of the series. This brings us to the most recent piece of workforce legislation, the Workforce Innovation and Opportunity Act (WIOA), passed into law in 2014.

 

Unlike most legislation that goes through Congress in a painful and controversial way, WIOA was instead passed with huge bipartisan support. It was pretty clear what needed to be fixed from WIA and how to fix it (but that is not to say that the fixes will be easy).

 

Without getting too deep into the weeds about this legislation, suffice it to say that WIOA:

  • Strategically aligns and promotes coordination of key programs in employment, education, and training at fed, state, regional and local levels through American Job Centers (former One Stop Career Centers), These programs, Wagner Peyser, adult education and vocational rehabilitation and former WIA programs (adult, dislocated worker and youth programs) are now required to co-locate, share resources, utilize integrated intake and reporting systems, and all of these programs will now be subject to reporting outcome measures (such as credential attainment, entered employment, employment retention and wage gains).

  • All training providers must report on outcomes of students, promoting accountability and transparency of training programs and those seeking training are not forced into “work first” before training is considered as an option.

  • Builds on proven best practices such as sector strategies, career pathways, regional economic development approaches, and work-based learning (such as apprenticeships and on-the-job training) and incumbent worker training.

  • It requires four-year state plans be submitted to the Federal Department of Labor with two-year updates (first report due March 2016). Local plans must align with state plans and must include: strategic planning elements, operational planning elements, operating systems and policies, program specific requirements, implementation strategy, and assurances

  • There will now be enhanced employer services, employer satisfaction surveys, and benchmarks of performance (yet to be determined) in how well employer needs are being met by the American Job Centers

  • And, last but not least, my favorite part of the legislation, WIOA fosters collaboration of regional economic development with workforce development initiatives, which has been my mantra for these many years! In fact, the Obama administration has put out a report called: “Ready to Work: Job Driven Training and Opportunity” that clearly outlines seven principles under which both workforce development and economic development must now operate…cooperatively. Briefly, these principles are:

ENGAGING EMPLOYERS – Work up-front with employers to determine local hiring needs, design training programs that are responsive to those needs – from which employers will hire.

 

EARN AND LEARN – Offer work-based learning opportunities with employers – including on-the-job training, internships, pre-apprenticeships and Registered Apprenticeships – as training paths to employment.

 

SMART CHOICES – Make better use of data to drive accountability, inform what programs are offered and what is taught, and offer user-friendly information for job seekers to choose programs and pathways that work for them and are likely to result in jobs.

 

MEASUREMENT MATTERS – Measure and evaluate employment and earnings outcomes. Knowing the outcomes of individual job-driven training programs – how many people become and stay employed and what they earn – is important both to help job seekers decide what training to pursue and to help programs continuously adjust to improve outcomes.

STEPPING STONES – Promote a seamless progression from one educational stepping stone to another, and across work-based training and education, so individuals’ efforts result in progress. Individuals should have the opportunity to progress in their careers by obtaining new training and credentials.

 

OPENING DOORS – Break down barriers to accessing job-driven training and hiring for any American who is willing to work, including access to supportive services and relevant guidance. In order for training programs to work, they need to be accessible for the people who need them most.

 

REGIONAL PARTNERSHIPS – Coordinate American Job Centers, local employers, education and training providers, economic development agencies, and other public and private entities to make the most of limited resources.

 

In fact, the report says: “EDA will include job-driven training principles in its new CEDS content guidelines, which provide recommendations and tools to help regions develop strong CEDS. These new content guidelines will be released in fall of 2014 and will be available to the over 380 current regional planning organizations as they implement and update their CEDS as well as to any community looking to develop an impactful economic development strategy for its region.”

 

Translation: every Comprehensive Economic Development Strategic plan (CEDS) is going to have to include these job driven principles.  So economic development is now going to have to include workforce development in planning goals and strategies for their region if they are going to utilize CEDS funding from the EDA. This is BIG STUFF!

 

Now, is this WIOA legislation a panacea? No, of course not…in fact there are many concerns about how to accomplish the goals of this legislation…how to get the parties to work together collaboratively (like economic development and workforce development), how to make sure there is enough funding to assure that the goals established in a local region have a prayer of being accomplished, how to get other organizations, such as higher education, aligned to the goals established by the local region when it does not represent a large financial stake for them, how to get the “mandated partners” of the American job Centers to co-locate and share resources….and lots of other concerns. BUT, that all being said, this legislation is definitely another leap forward in the evolution of workforce development programming and we will undoubtedly be revisiting this in a few years with another needed update. However, in the meantime, let’s make the most of this opportunity and take that bipartisan spirit to heart in each of our local regions and make every effort to embrace this new opportunity to work together to improve the workforce of the USA.


 

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Achieving Shovel Ready Certification in New York State: Tips from a Veteran Site Selector

by Guest Author 13. February 2015 16:31

When conducting site selection programs for demanding clients, time is often a critical factor affecting our decisions. A universal given is that the project leadership tends to be risk averse, and they see risk in any number of areas—permitting schedules, hidden site development and remediation costs, and local utility capacities are just a few areas of concern. In New York State it is possible to fast track some projects while keeping the level of anxiety under control. That’s because New York has one of the oldest state-sponsored shovel ready certification programs in the country, and it is in the hands of Empire State Development (ESD).

 

New York’s certification program relies on a formal process to pre-qualify larger greenfield properties for development by three types of users: High-Tech Manufacturing, Warehousing and Distribution, and Multi-Tenant Business and Technology Park. Applicants who typically submit properties for shovel ready certification include local governments, economic developers, property owners and managers.

 

The program started years ago as Build-Now New York (BNNY) Shovel Ready Certification. BNNY was a statewide competition among communities and developers who vied to receive funding assistance from New York State for key studies and assessments that were needed as a part of the Shovel Ready Certification process. In the early days, I helped ESD qualify sites for the program. Over the years the funding aspect disappeared, and evolved into the Shovel Ready Certification program we see today.

 

A total of 110 communities and developers competed for funding in the BNNY program, and 31 properties were later granted Shovel Ready Certification status. Under both programs, a total of 44 sites have been granted Shovel Ready Certification status.

 

According to Brenda Grober who is in Strategic Business Development at ESD, “Almost every new business or expansion prospect that I assist asks for shovel ready properties for their projects.” This reflects the realities of the program -- many successful industrial and commercial projects have been developed on shovel ready certified sites throughout the state. Ms. Grober cites the following examples: 1) the Saratoga Technology and Energy Park in Malta, now home to Global Foundries, Inc.’s semi-conductor chip manufacturing operation; and 2) the Town of Florida Business Park, which benefited from the relocation of Beech-Nut Corporation, which had been located 20 miles to the east in Canajoharie for 118 years. Beech-Nut constructed a modern 550,000-SF plant on this shovel ready site, chosen for the abundant water, sewer and power to support its operations. And, finding such a site nearby, Beech-Nut was able to continue to rely on the local workforce and suppliers.

 

Shovel Ready Certification Recommendations

 

·         Communities, economic developers and property owners interested in submitting properties for shovel ready certification should start by looking at the ESD website and becoming familiar with the useful information about this program. Here they will also find the Development Profiles for the three allowable uses: High-Tech Manufacturing, Warehousing and Distribution, and Multi-Tenant Business and Technology Park. It is incumbent upon all applicants to choose the development profile that best matches their properties and the criteria that need to be satisfied.

·         It is also important to carefully review the Shovel Ready Self Evaluation Checklist on ESD’s website. The checklist identifies the reports and documentation that must be included with the Shovel Ready Application.

·         The Application is the same for all three development profiles, and it, along with Frequently Asked Questions, is posted on the website. The process to complete the application will be quicker and easier for those who are most prepared. Ms. Grober recommends that all applicants need to be thorough in their responses and to provide everything required on the checklist.

·         Include letters of support from the community and property owner of the site submitted, local and regional economic development organizations, business leaders and other stakeholders. The more the better.

·         The timeframe necessary to review each application is dependent on the completeness of the application and the accuracy of the responses submitted to ESD so applicants need to be patient. Six government agencies, including ESD, are involved in the review. Applicants need to understand that some of the required studies take a long time to complete. One example is wildlife assessments which can take over a year.

·         It is beneficial for the developers to communicate with the Regional Economic Development Councils to discuss the goals and objectives for their respective communities and how well their properties are able to satisfy the needs of the type of businesses the communities want to attract. Remember, the process to achieve shovel ready certification can be costly. Financial assistance may be available from the Regional Economic Development Councils or local electric utilities if a shovel ready site is targeting development which is compatible with a local or regional plan.

·         According to Ms. Grober, if a property has a known wetland or historic artifacts on the site or is located in part of a legislatively defined agriculture district, the community and/or developer should discuss the feasibility of development and mitigation options with the responsible state/ federal agency, before investing the time and resources necessary to obtain shovel ready certification.

 

Benefits of Shovel Ready Certification Status

 

·         Industrial and commercial users are able to obtain valuable pre-development information about the site of interest, its assets and constraints.

·         The process of site certification stimulates communication and team-building within the community as the stakeholders work through the process of determining the type of development that best meshes with their vision, and collaborating to obtain community support.

·         Marketing assistance from ESD is an intangible, but potentially significant benefit, which includes a coordinated event to announce site certification, the placement of a brightly colored sign on the property, and the addition of the property to ESD’s shovel ready website.

·         Technical assistance and guidance on permitting issues is provided by ESD and other state and federal agencies.

 

Since necessary permits are obtained and pre-development studies are completed before an industrial or commercial prospect considers the site, site certification can be a valuable inducement when recruiting a company to locate on a suitable site. It may reduce risk and shorten the businesses’ decision-making timeline related to making a significant investment in a property and a community.

 

 

Joan H. Herron

President

Herron Consulting

 

Herron Consulting is a national site selection and economic development consultancy

www.HerronConsultingServices.com

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One of the coolest economic development programs I've ever seen: Biddeford's Main Street Challenge

by Christa Franzi 20. January 2015 09:33

 

There are some very cool economic development programs out there…

 

From incubators in public schools to experiential learning opportunities in manufacturing, but my favorite one to date is the City of Biddeford, ME's Main Street Challenge. Who doesn't love a good competition? Think Shark Tank but instead of wads of cash from wealthy entrepreneurs, three winners receive a package of goods and services worth over $20,000 from the local business community and the public sector.

 

The Biddeford Main Street Challenge is designed to provide entrepreneurial businesses a head start during the most challenging year of operation (year-1), encourage existing businesses interested in opening an additional or expanded storefront to consider Biddeford, fill empty downtown storefronts, and create a "buzz" to promote Biddeford as a great place to open a business. The challenge includes three phases:

 

Phase 1:

Written business concept pitch (2-pages)

Phase 2:

Around 10 of the best concepts are chosen to attend a day of training and submit a full business plan.

Phase 3:

About 6 businesses are chosen to present their business plans and ideas to a committee, who chooses 3 grand prize winners.

 

These grand-prize packages are no joke. They are purposefully designed to help entrepreneurs turn their ideas into reality. Prizes include:

 

  • Forgivable Loan of $10,000 from the City
  • 4-months free lease in a downtown storefront
  • 2-hours of free architecture design work
  • Free Chamber membership and advertising at the Amtrak station
  • 3-hours of free legal services
  • 1-year free phone and internet
  • 1-3 page custom website
  • And more…

 

The prizes are awesome, but the coolest thing about this program is how Biddeford's business community and public sector organizations rallied together to make this program work. There is definitely a local philosophy of "if you success, we all succeed" and it's working. The Main Street Challenge was held twice - in 2012 and 2014 - and winning startup businesses like Dahlia’s Delights, Elements, and Tote Road are helping to strengthen the local economy and reinvigorate Biddeford's downtown. Check out the Heart of Biddeford's website to learn more about the Main Street Challenge.

 

 We love hearing about great economic development programs that are providing real results. Tell us about your favorite! 

 

 

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Featured Indicator: The Labor Force Participation Rate

by Tom Dworetsky 19. January 2015 21:40

The labor force participation rate (LFPR) in the U.S. continues to fall. In December 2014 it reached 62.7%, down from 66.0%, where it stood in December 2007 before the Great Recession. While three percentage points might not seem like much, there is no denying that the LFPR is on a downward trend.

 

The labor force participation rate is the proportion of the labor force (those either employed, or unemployed and actively looking for a job) as a percentage of the total civilian non-institutional population ages 16 and over. The simple definition is that it is a measure of the percent of people in the labor force.

 

A look at this graph from the St. Louis Fed shows its trajectory since 1948. The LFPR rises sharply between the mid-1960s and 1990. This surge was largely a result of women entering the workforce in unprecedented numbers. It then fluctuates but continues to increase slightly through about 2000. It peaks in January of 2000 at 67.3%, and then begins its descent to where it sits today. The last time to LFPR was this low was in 1978.

 

There are several factors that are contributing to the shrinking workforce, a subject of ongoing debate among economists. Some of these factors are demographic, while others are a result of economic conditions. Here are two major factors:

  • The Aging Population – The Baby Boomers make up a large share of the total population. As this group begins to retire, the LFPR will continue to be driven downward.

  • The Weak Economy – The number of employed Americans fell dramatically during the recession, but the other component of the labor force—the unemployed— also fell. Many potential workers opted to stay in school or return to school, while others became discouraged and simply stopped looking for work altogether.

 

Why Does This Matter?

What’s important to note here is that while some portion of the falling labor force participation rate can be explained by retiring baby boomers, higher rates of college attendance, and other demographic and social trends—that is, people who (in most cases) voluntarily elect to stop working—another portion is a direct result of high joblessness. People who are jobless but have stopped looking for work are not included in the unemployment rate, even if they would like to work if the opportunity arose. The sharply declining LFPR is a strong indication of how significant this portion of the population might be. One estimate puts this number at 2 to 4 million—that’s a full 1 to 2% of the civilian population 16 and over that is no longer part of the labor force. It remains to be seen how long the LFPR will continue to fall, and what this will mean for our economy.

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The Disconnect between Education and Workforce Development, Part II: The Workforce Investment Act

by Colleen LaRose 19. January 2015 17:59

In continuing our series on Workforce Development, this article builds on November’s topic—The Disconnect between Education and Workforce Development—and explains what modern workforce legislation has done to address this problem. The first piece of legislation, the Workforce Investment Act (WIA), was implemented under the Clinton Administration, and will be the topic of this month’s article. Next month, we will discuss the latest in workforce legislation, the 2014 Workforce Innovation and Opportunity Act (WIOA)

 

The modern system of workforce development was shepherded in under the administration of Bill Clinton in 1998. The legislation that was passed was called the “Workforce Investment Act” and was truly revolutionary in how it determined that workers would be matched for available employment opportunities, and trained if necessary to meet the demands of local businesses.

 

The first thing that was revolutionary about this legislation was the establishment of state and local “workforce investment boards” to oversee and be accountable for how local, state, and federal funds were being expended in the name of employment and training. The boards also required the majority of membership on these boards to be employers to assure that employment and training decisions being made were market-driven.

 

The second part of the legislation that was revolutionary was the establishment of the “One Stop Career Center system” in which multiple programs that helped people find employment were required to begin working proactively together. The multiple programs mandated to work together as a system included:

  • Programs funded by the Department of Labor and accountable to the WIBs through their oversight of One Stop operations

  • Adult Education

  • Postsecondary Vocational Education

  • Vocational Rehabilitation

  • Title V of the Older Americans Act

  • Trade Adjustment Assistance

  • Veterans Employment and Training Programs

  • Community Services Block Grant

  • Department of Housing and Urban Development

  • Unemployment Insurance

  • Job Corps

  • Bureau of Apprenticeship and Training

The programs “accountable to the WIBs through their oversight of One Stop Operations include adult (adults with low incomes), dislocated worker (those recently separated from their employment), and youth programs (career awareness and preparation for both in school and out of school young people). Another revolutionary step from WIA was the establishment of benchmarks of accountability for these three programs. These benchmarks of accountability became to be known as “the common measures” and for adult and dislocated workers measured the effectiveness of training programs by measuring how many of the trainees were able to find work (entered employment), how many were able to keep their job for six months or more (employment retention), and what the increase in wages has been since acquiring employment with their new skills (wage increase). Similarly for youth programs, measures of accountability for training programs are whether the youth was able to enter either an employment situation or was able to access additional levels of education/training, whether they were able to increase their numeracy and/or literacy skills, and whether or not they were able to attain a degree or certificate.

 

This was pretty good legislation and was able to continue operating with relative success for more than 15 years. However, there were some major problems with WIA.

  • WIA was severely underfunded. It frustrates me that these services were slashed when they were needed more than ever due to the need to skill up the workforce to be competitive globally. The direct result is that this put the US behind where it should have been in the global marketplace. The peak of funding for workforce development programs was in 1979. In real dollars, funding for workforce development dropped by 70%, with the most severe withdrawal of funding of more than 12% coming under the Bush Administration from 2000 to 2007.

     

  •  The focus of the legislation was on helping people get a job first, with training being seen as a “last-ditch effort” to get the person employed. While it seemed like a good idea at the time, this philosophy of “work first” has, over time, lead to a lower skilled workforce at a time when more and more technical skills are required in all industries around the globe.

     

  • The “work-first” philosophy was especially damaging to low-skilled, low-income, and youth populations who were largely “dumped” into service industry jobs with little career growth opportunities.

 

Some other problems with WIA legislation were:

  • Workforce development initiatives were not actively coordinated with economic development

  • Workforce development maintained a social service mentality and was not proactive in supporting business

  • Innovative workforce development programming was largely grant driven, which meant that when the grant dried up, so did the initiative. This also meant that workforce systems spent much of their time chasing dollars for specific initiatives and would change strategies as new funding opportunities became available.

  • Lack alignment (local, regional, state, federal) of strategic planning priorities

  • Changing priorities with new administrations

  • Boards too big and ineffective

  • Silos of service – not leveraging resources and collaborating as needed between system partners

  • Training delivered that did not result in employment

  • Reactive not proactive (too tied up with red tape)

  • Best practices not widely shared, little to no training for WIBs other than legislation rules.

  • Not supportive of entrepreneurship

  • Wagner Peyser funding largely run by those in Civil servant positions who are not “motivated” to change or improve services

  • Need more on-the-job training (OJT) and apprenticeship

 

So, while WIA was most definitely a giant step ahead of JTPA and its predecessors, it still needed some tweaking. So, on July 22, 2014, new workforce legislation was signed into law called the Workforce Innovation and Opportunity Act (WIOA). Stay tuned for more on WIOA next month!

 

Unlike most legislation the goes through Congress in a painful and controversial way, WIOA was instead passed with huge bipartisan support. It was pretty clear what needed to be fixed from WIA and how to fix it (but that is not to say that the fixes will be easy).

 

Without getting too deep into the weeds about this legislation, suffice it to say that WIOA:

  • Strategically aligns and promotes coordination of key programs in employment, education, and training at fed, state, regional and local levels through American Job Centers (former One Stop Career Centers), These programs, Wagner Peyser, adult education and vocational rehabilitation and former WIA programs (adult, dislocated worker and youth programs) are now required to co-locate, share resources, utilize integrated intake and reporting systems, and all of these programs will now be subject to reporting outcome measures (such as credential attainment, entered employment, employment retention and wage gains).

  • All training providers must report on outcomes of students, promoting accountability and transparency of training programs and those seeking training are not forced into “work first” before training is considered as an option.

  • Builds on proven best practices such as sector strategies, career pathways, regional economic development approaches, and work-based learning (such as apprenticeships and on-the-job training) and incumbent worker training.

  • It requires four-year state plans be submitted to the Federal Department of Labor with two-year updates (first report due March 2016). Local plans must align with state plans and must include: strategic planning elements, operational planning elements, operating systems and policies, program specific requirements, implementation strategy, and assurances

  • There will now be enhanced employer services, employer satisfaction surveys, and benchmarks of performance (yet to be determined) in how well employer needs are being met by the American Job Centers

  • And, last but not least, my favorite part of the legislation, WIOA fosters collaboration of regional economic development with workforce development initiatives, which has been my mantra for these many years! In fact, the Obama administration has put out a report called: “Ready to Work: Job Driven Training and Opportunity” that clearly outlines seven principles under which both workforce development and economic development must now operate…cooperatively. Briefly, these principles are:

ENGAGING EMPLOYERS – Work up-front with employers to determine local hiring needs, design training programs that are responsive to those needs – from which employers will hire.

EARN AND LEARN – Offer work-based learning opportunities with employers – including on-the-job training, internships, pre-apprenticeships and Registered Apprenticeships – as training paths to employment.

SMART CHOICES – Make better use of data to drive accountability, inform what programs are offered and what is taught, and offer user-friendly information for job seekers to choose programs and pathways that work for them and are likely to result in jobs.

MEASUREMENT MATTERS – Measure and evaluate employment and earnings outcomes. Knowing the outcomes of individual job-driven training programs – how many people become and stay employed and what they earn – is important both to help job seekers decide what training to pursue and to help programs continuously adjust to improve outcomes.

STEPPING STONES – Promote a seamless progression from one educational stepping stone to another, and across work-based training and education, so individuals’ efforts result in progress. Individuals should have the opportunity to progress in their careers by obtaining new training and credentials.

OPENING DOORS – Break down barriers to accessing job-driven training and hiring for any American who is willing to work, including access to supportive services and relevant guidance. In order for training programs to work, they need to be accessible for the people who need them most.

REGIONAL PARTNERSHIPS – Coordinate American Job Centers, local employers, education and training providers, economic development agencies, and other public and private entities to make the most of limited resources.

 

In fact, the report says: “EDA will include job-driven training principles in its new CEDS content guidelines, which provide recommendations and tools to help regions develop strong CEDS. These new content guidelines will be released in fall of 2014 and will be available to the over 380 current regional planning organizations as they implement and update their CEDS as well as to any community looking to develop an impactful economic development strategy for its region.”

 

Translation: every Comprehensive Economic Development Strategic plan (CEDS) is going to have to include these job driven principles. So economic development is now going to have to include workforce development in planning goals and strategies for their region if they are going to utilize CEDS funding from the EDA. This is BIG STUFF!

 

Now, is this WIOA legislation a panacea? No, of course not…in fact there are many concerns about how to accomplish the goals of this legislation…how to get the parties to work together collaboratively (like economic development and workforce development), how to make sure there is enough funding to assure that the goals established in a local region have a prayer of being accomplished, how to get other organizations, such as higher education, aligned to the goals established by the local region when it does not represent a large financial stake for them, how to get the “mandated partners” of the American job Centers to co-locate and share resources….and lots of other concerns. BUT, that all being said, this legislation is definitely another leap forward in the evolution of workforce development programming and we will undoubtedly be revisiting this in a few years with another needed update. However, in the meantime, let’s make the most of this opportunity and take that bipartisan spirit to heart in each of our local regions and make every effort to embrace this new opportunity to work together to improve the workforce of the USA.

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How Economic Developers Can Learn From Non-Profit Organizations

by Rachel Selsky 19. January 2015 17:56

A few years ago I was looking to get more involved in my community and for an opportunity to meet other like-minded young people in my town and I found a program hosted by Marlboro Graduate School called “Get On Board.” It is a unique six-month program designed to teach young professionals about non-profit boards while at the same time helping them grow their personal and professional network while serving the community. At the end of the program I was honored to be invited to join the Youth Services of Windham County board of directors. Youth Services provides programs and assistance to young people and their families through home-based services, mentoring like Big Brothers Big Sisters, young mothers groups, assistance with finding jobs and homes, court diversion programs, and many other services.

As I have become more involved with Youth Services I have noticed a number of ways that working with a non-profit organization can inform economic development efforts.

  • Involve Young People: Many economic development planning processes do not do enough to involve young people in the brainstorming, decision making, or implementation process. By inviting young people to participate in the process there will be an infusion of new ideas, new points of view, and new energy to get work done.

  • Partner with Non-Profits: Many non-profits are doing really incredible work towards many of the goals being pursued through a planning process. For example, Youth Services manages the local Ready to Achieve Mentoring Program (RAMP) which provides career mentoring to young at-risk youth through an after-school program that includes assistance with resume writing, one-on-one mentoring programs, site visits to local employers, presentations from professionals, and general soft skill development. The RAMP program focuses on STEM careers and hopes to help the high school students move towards successful careers. This type of workforce development and youth engagement is just what is called for in many economic development plans.  

  • Sharing Resources: By using the planning process to support partnerships and collaborations it is possible to share what resources do exist and work towards shared successes. Non-profit organizations are facing unprecedented challenges when it comes to finding resources for the work they are doing and by finding common ground with other agencies and organizations there could be new opportunities that develop.  

  • Basic Welfare Needs as Requirement for Economic Development: In many cases there are basic health, safety, and welfare issues that are standing in the way of people achieving their potential. Planning processes should consider welfare issues or else risk missing an entire segment of the population.  

  • Ask For Help: One of the first things you learn when talking about fundraising for non-profits is that the hardest part is taking the first step and asking. People want to be involved in their community and help in any way that they can, they just need to be asked. During planning processes we can often get overwhelmed by the amount of work that needs to be done in order to move towards the goals and vision but asking people to get involved and work within their networks may be just what is needed to have success in economic development.


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About Camoin Associates

Camoin Associates is a professional service firm that utilizes its understanding of the public and private sector investment process to assist businesses and developers in capitalizing on funding, financing and tax programs established to encourage private investment. We also specialize in advising economic development organizations and municipalities in creating strategies, policies and programs that support investment and job creation.   [Click Here for More]

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