XBriggs-Inventing the Next American Economy (APA Keynote) 0413

Summary

"If creating jobs and distributing money were easy, someone else would have done it."

• We need to invent the next American economy—not “declare” it or expect it to materialize.
• It will take work to make it inclusive—The innovation economy is driving very unequal outcomes so far.
• Planning is central—This kind of “inventing” is not a solo act of inspiration or luck.

Brazilian President Luiz Inacio “Lula” da Silva, to the press, 2004

Example

Investing in Workforce Intermediaries

Lesson 4

Pursue targeted skill development.

An initiative of Jobs for the Future and the Annie E. Casey, Ford, and Rockefeller Foundations

Examples

Lesson 2

Support innovation with vibrant, mixed-use focal places and critical infrastructure.

Lesson 1

Have a plan—not a fixed blueprint

but a roadmap with clear priorities.

Barcelona@22

a. Clear picture of how your economy is changing

Develop demand (employer)-driven workforce partnerships: targeted, relationship-driven, outcome-driven, aligned with your growth drivers.

Barcelona@22

Guadalajara’s Ciudad Creativa Digital

Boston Innovation District

So where do we go from here

PART THREE:

LESSONS FOR PLANNING AND PLANNERS

b. Well informed about innovative clusters and global markets.

1.Focal places: “innovation districts” are promising, but it’s unclear how widely the benefits are shared.

2. Infrastructure: Need transportation, telecoms and more—prioritized by highest benefit to your growth drivers.

?

MassChallenge

Boston Redevelopment Authority

c. Prioritizing some growth drivers and catalytic projects to cultivate them.

A tale of two economies

Rochester, NY and San Diego, CA

And yet America's economy has drifted toward more local consumption, smaller export share

Model: Metro Business Planning

Example

Identify Clusters: Manufacturing, Business Services, Logistics, Tourism

Living Wage

Ordinances

Lesson 3

Strengthen demand for local goods and services, and upgrade jobs.

Example

Anchor-Driven Strategies in Cleveland

Example

Address the demand for human capital among middle and high skilled jobs

MIT/University of Maryland Report on Cleveland's

University Hospitals Vision 2010

Source: Bureau of Economic Analysis

Reality:

Need to focus on cooperative innovation (ecosystem logic) and job quality, expanding and capturing the benefits of both your traded and local service economies.

Develop List of

"Top Asset Sectors"

1. Targeted procurement by public agencies and anchor institutions.

2. Encourage local sourcing by innovative firms—problem solve.

3. Good-job procurement standards

4. Local wage ordinances

Four Macro Challenges

Filling the gap takes time, and the workforce is expanding

2000: 53

2010: 123

Now: 140+

• $800 million in total demand
• Project Labor Agreements
• New construction jobs

Strategy 1: Become a Leading

Hub of Advanced Manufacturing

Global

Competition

Total Demand

Source: M. Porter, Harvard Business School

Source:

National Employment Law Project

• Education
• R&D
• Immigration reform
• Fair trade and intellectual property enforcementt

Part 1:

The Big Challenges

Equitable

Returns

Most high-growth economies are innovation-driven trade engines

...which suggests the need for more balanced, comprehensive strategies.

Myth #3:

To get jobs and growth, we need a strategy that’s all about attracting and retaining tech companies (sector logic).

EVERY ECONOMY IS

REALLY TWO

Compound annual growth rate of GDP, 2008 - 2011, by metro

Carbon

Emissions

But what ideas are driving our

CURRENT efforts to chase economic growth and create more good jobs?

And do those ideas make sense?

Source

Source: Brookings Institution

Traded-sector jobs pay about $15k more per year, and every traded-sector job creates about

2.5 local-service jobs.

Traded

Non-traded

Strategies

The TRADED sector

The NON-TRADED

("local service")

sector

Source: ECONorthwest and U.S. Census Bureau

• Upgrade jobs
• "Graduate" workers to traded

• Cultivate
• Leverage
• Expand access

Total Output

Source: Bureau of Economic Analysis

The low-wage recovery

but 45% of all U.S. exports

(and have highest multipliers)

Advanced

Industries are just 10% of overall economy

But increases are quite dispersed

Source: Moretti, The New Geography of Jobs

Brain hubs offer higher wages to all

(% Growth in Patents, 2000 - 2008)

Innovation hubs have added jobs and skilled workers faster in recent decades

Source: Brookings Institution

Most

Small

Businesses

Source: Enrico Moretti, The New Geography of Jobs

Patent production remains highly concentrated geographically (Total patents, 2000 - 2008)

Top Innovation Sectors for Growth Companies

“Advanced industries—characterized by dynamic R&D and engineering-intensive industrial concerns—must be a focal point ... delivering products and services in industries ranging from aerospace and space to auto assembly, advanced energy systems, IT, and medical devices."

Source: Brookings Institution

We face a dilemma:

Only trade generates growth, but with limited direct employment in most regions.

Think: energy source, dynamic and volatile. Most jobs are in the local service economy, which offers limited innovation and job quality.

Think: big platform, missing ladders.

High

Growth

Companies

Source: OECD

Identify your community’s trade partners and growth clusters--even nascent ones.

Source: The Atlantic, using BLS data

Myth #1:

Our city/town/region can compete if we lower the cost of doing business

(the old logic of attraction).

Reality:

Use a complete play book to enhance the value of place.

PART TWO:

THE COSTLY MYTHS ABOUT BUILDING LOCAL PROSPERITY—ECONOMIC GROWTH AND JOBS

Myth #2:

If we invest in education and support “entrepreneurship,” the next economy will materialize (genius-of-the-market logic).

Source: OECD

Two main drivers of real economic growth:

Commodities and innovation

Reality:

Need to target and integrate investments ("upgrades") with a focus on key clusters, occupations and gaps—without assuming perfect foresight.

Fastest Growing Occupations in the U.S.

by projected growth and median wages, 2010-2020

Commodities

Tackle

Barriers to Growth

Innovation

Enhance

Competitive

Strengths

Attract companies to fill strategic gaps

The innovation economy is not a “bandwagon”—it’s the biggest transformation of our lifetimes.

And it is driving the have’s and have-not’s—not just people but places—farther apart.

Source: Bureau of Labor Statistics

Unemployment Rate, February 2013

Only about 1 in 4 jobs pays a living wage.

Source: Bureau of Labor Statistics