What’s Working in Job Creation: US Chamber Releases Enterprising States Study

Each year the U.S. Chamber of Commerce Foundation analyzes data to determine what states have done over the previous year to create jobs and expand the economy.  The analysis is broken down into two parts, one that discusses what states should be doing and one that details what states are doing and then ranking the states using a performance, data-driven model.  The Chamber calls the annual report, Enterprising States, and provides a copy of the 2013 analysis HERE.

This year Enterprising States focuses on the importance of supporting small business as a means of economic development and job creation in the United States.  Historically, small businesses have been the country’s primary job creator, but following the latest recession these economic engines have failed to return to their traditional roles.  The Chamber warns that, “[p]olicymakers ignore small business at their own peril and that of the economy.” 

Last year, only 16% of small businesses added employees and businesses five-years-old or younger now employ just 8% of the total work force, which is a decrease of 33% over the past two decades.   Small and new businesses continue to struggle in the post-Great Recession economy for a number of reasons, including significantly lower consumer spending and reduced lending by community banks.  These factors contribute to a less than rosy outlook by small business owners.  The U.S. Chamber surveyed small businesses in January 2013 and found more than half expected business to be worse over the next two years.  This is more than twice as high as the same survey revealed a year earlier.  Lower optimism results in fewer new hires, smaller investment and more defensive operations.

If small and new businesses are not adding jobs, what can states do to encourage small and new business startups?  The U.S. Chamber recognized ten initiatives that appear to be working to support and grow small and new businesses in the country. 

·         Business plan competitions – identify and assist entrepreneurs turn ideas in start ups.

·         Accelerator initiatives – programs that assist startups become stand-alone companies.

·         Economic gardening initiatives – provide resources to existing firms so they can expand.

·         Ecosystem initiatives – focus programs and projects on areas where a concentration of like-mission companies exist.

·         Workforce development initiatives – help business train and locate qualified employees.

·         Seed and venture capital – provides access to funding to help replace diminished availability of bank loans.

·         Networking and collaboration initiatives – match small business with mentors in large business and higher education.

·         International trade – reaching new global markets is vital for start ups and small business

·         Streamlined state administrative processes – efforts to eliminate rules, regulations and uncertainty

·         Broadband investment – high speed online access is critical being competitive

Thankfully, Arkansas utilizes many of these initiatives, but unfortunately many lack sufficient funding to be fully implemented on a statewide basis.  A future blog post will highlight what Arkansas is doing to support small and new businesses.  For more information contact Michael Lindsey at Michael@RogersLowell.com

New Study Identifies Successful Economic Development Public Policies

Last week the U.S. Chamber of Commerce released their annual analysis of public policies that are driving economic development around the United States.  This study also identified the states that are “most likely to grow, create jobs and prosper” in the next decade.

The U.S. Chamber finds that the traditional model of recruiting industry and jobs by offering incentives is no longer enough.  The most successful states over the past few years shared a number of commonalities.   Part of their success derives from location and part is through proactive policies that encourage economic development.

In part, the states with the highest growth in jobs and gross domestic product are the result of having a state economy that is heavily invested in agriculture and energy.   The United States is the world leader in food production, exporting $135 billion in agricultural products in 2011.  Last year represented a record year as worldwide demand for food continues to increase.  Having a base economy anchored by agriculture provides stability and growth that tends to be recession-proof.

If agriculture provides a stable base then the energy sector supercharged states’ economies in 2011.  The growth of natural gas and the tapping of new oil formations have turned this country into a net EXPORTER of petroleum products for the first time since 1950.  This surprising turn-around has not only created lots of jobs, but the jobs are generally high wage positions.

Over the past few years, Arkansas benefited from a stable agricultural base as well as an energy sector economy that has helped carry the state through the latest recession.  The state cannot rely on its natural advantages alone to create jobs and grow our economy.  So what are the public policies that are working in other states?

A highly trained workforce with a strong background in math, science, technology and engineering is critical in attracting, retaining and growing jobs.  The report finds that even during periods of high unemployment, like those experienced over the past four years, “thousands of jobs throughout America cannot be filled because of a growing skills gap.”  Not all of these high-demand jobs require a four-year degree.  Many need specialized training or a two-year degree so states must support both types.  States also need to support programs that connect high tech graduates to jobs. These efforts typically utilize a statewide job bank and partnerships with employers.  The good news is that Arkansas scores well in several higher education rankings - #5 in higher education efficiency, #5 in high school advance placement and #17 in job placement efficiency, according to the study.

Infrastructure investment also plays an important role in economic development.  The U.S. Chamber finds that “States and cities must continually upgrade their highways, airports, harbors, utility distribution systems, railways, water and sewer systems, and communications networks to keep pace with the requirements of an ever-changing business environment.”  Roads must be sufficient to meet the demands of the business and residents while access to high speed broadband is vital for businesses to compete.  According to the analysis, Arkansas does not rank high in road quality.  However, voters will have an opportunity in November to authorize a temporary half-cent sales tax to fund new highways in the state, which would significantly improve our state’s infrastructure.  According to the U.S. Chamber, in Arkansas “[t]ransportation infrastructure improvements are especially critical in maintaining affordable shipping options for the state’s product-centric industries, increasing economic competitiveness and long-term job creation.”

Taxes and regulations are also important aspects of a strong economic climate.  They find that a “reasonable tax code and a sensible, predictable regulatory environment can encourage investment.”  Many of the states that have seen tremendous growth over the past decade have made a concerted effort to review business regulations and eliminate those that are overly burdensome and streamline governmental processes especially those related to payment of business taxes.

Finally, policies that encourage and support innovation and entrepreneurship are producing a tremendous return on investment for states around the country.  In Maryland, the state invested $70 million to support startup and early-stage companies that emerged from that state’s research universities.  They found that for each $1 invested by the state, an additional $38 dollars of private funding was raised to support entrepreneurs in Maryland.  Supporting innovation goes hand-in-hand with supporting higher education’s efforts to increase graduates in science, math, technology and engineering.

So, applying the U.S. Chamber's analysis to Arkansas finds that the state enjoys a solid agricultural base as well as a strong energy sector presence.  Both sectors should be support and encouraged to continue to grow and produce jobs.  The state should continue to fund higher education and encourage students to pursue high tech related degrees and certifications.  Additionally, support for programs that encourage entrepreneurship and fund early stage companies is important.  A review of existing business regulations may be in order to find rules that unnecessarily waste time and create added business expense.  Finally, investment in infrastructure is vital to Arkansas’ economy and necessary if the state hopes to add jobs and compete with our surrounding states.

Download the full report HERE.

Unemployment, job fair attendance indicate positive signs

Workforce recruitment, retention and outreach are some of the most important topics for staff at the Rogers-Lowell Area Chamber of Commerce.

The chamber conducts two job fairs annually, typically in May and October, which attract between 50 - 120 hiring companies and anywhere from 1,500 to 3,200 job seekers depending upon current economic conditions. However, as we indicated in press coverage of our most recent event on October 12, we believe there are some positive signs of recovery for job seekers:

Job Fair Turnout Shows Improving Economy (40/29 News)

http://www.4029tv.com/news/21278363/detail.html

Job Fair Offers Positions, Training (40/29 News)

http://www.4029tv.com/money/19344047/detail.html

Job Fair Attracts Unemployed, Those Seeking Better Pay (The Morning News)

http://www.nwaonline.net/articles/2009/10/12/business/101309busjobsearch.txt

Economic indicators continue to improve. At the Rogers-Lowell Area Chamber of Commerce, our economic development inquiries have been steady or up over 2008 every single month year to date (January - September 2009). This includes new business inquiries, economic development prospects, individuals looking to open franchises, small businesses and home-based businesses.

Northwest Arkansas remains an outstanding and desirable place to go into business as well as to live, play and raise a family. We're pleased to see progress in historic downtown Rogers as well - downtown Rogers merchants are banding together better than we've ever seen, and there is a new attitude of optimism in downtown Rogers spurred by efforts from Main Street Rogers (Mocha on Main Street, the new butterfly and hummingbird park on First Street, downtown intersection improvements), as well as efforts by merchants (third Friday Twilight Walks are thriving).

We're serving more diverse business inquiries than ever, and our diversity program continues to gain momentum. Most recent U.S. Census Bureau numbers still place Rogers at approximately 31% Hispanic or Latino, and we are assisting many of these individuals with start-up businesses (most popular: restaurants, auto detail and repair, child care, salons) as well as translation, outreach and referral services.

As you may recall, in June 2009 Forbes magazine ranked the Fayetteville-Springdale-Rogers MSA (metropolitan statistical area) at #2 on its list of the best places in the nation for recession recovery (http://www.forbes.com/2009/06/09/recession-economy-cities-business-beltway-recovery-cities.html). We couldn't agree more, although we think Northwest Arkansas is a fantastic place even without talk of recessions!

Economic Development Behind the Scenes

Economic development is a vague concept for the general public, at best.

Better defined as business development, or the dynamic process of recruiting new businesses and assisting to existing businesses, it begins to make sense. Try this on for size: economic development equals new businesses, new customers and new residents which actively contribute to our community's quality of life, i.e. all the things that make Northwest Arkansas a fantastic place to live, work and play.

Economic development is one of the most effective things we can do for the community as a chamber of commerce, and yet it is often the least understood and definitely the most poorly communicated. That's because we can't always say what we're doing when we're doing it.

So, in the spirit of transparency as best we can offer it, this recent information we've shared with our executive committee of the board of directors might be of interest:

Economic Development Report (YTD Aug. 2009)

Small Business Outreach

- Assisted 46 businesses.
- Most inquiries related to business licensing, permitting, how to structure a business.
- Many referrals to experts in the field, i.e. SCORE, the Small Business Administration, SBTDC.
- Economic environment has led many to take the leap to start a business after years of considering it.
- Types of inquires range from handyman services, restaurants and auto repair/detail (most popular) to training/consulting, franchises and child care operations.

Workforce Recruitment/Retention

- Served 100+ job seekers.
- Assistance includes resume review/updating, referrals to job banks and career resources and orientation to job seeking tools such as LinkedIn.
- Materials (magazines, DVDs, maps) and resources (community tours) offered to area employers to assist in efforts to attract and retain the best and brightest for Northwest Arkansas.

Minority Business Outreach

- Served 30 start-up inquiries and 143 job seekers.
- Supported 133 individuals with permits, forms, licensing, health department compliance and translation.
- Assisted 18 individuals with MBE (Minority Business Enterprise) Certification.
- Provided Spanish and English language courses to 60 individuals.

Business Recruitment/Expansion

- Responded to 75 inquiries from prospective/existing companies.
- Many inquiries are related to data and demographics, but an average of 3 - 5 inquiries a month seeking the opportunity to locate or expand in our community.
- Efforts continue in downtown Rogers, with assistance provided to companies such as Enformix (www.enformix.com) and Rolando's restaurant (www.rolandosrestaurante.com) with their new downtown locations.

It may not be the most exciting thing we do in terms of the attention span of the general public, but it is one of the most important and valuable things we do every day toward our goal of growing business, building community.

Ready to stimulate the economy?

We have a theory at the Rogers-Lowell Area Chamber of Commerce. Prepare yourself: it is a little bit Pollyanna-ish. We honestly believe that local action can affect big change. Take the economy as a starting point: can we change it across America tomorrow? Probably not. Can we stimulate positive changes that help local businesses and, in turn, serve as the first steps toward national (and international) recovery? Absolutely.

Step 1: Good news. It's out there, but you have to listen carefully to find it with all the rhetoric and background noise. Here's a start: mortgage rates are lower than the nation has seen in decades, and can potentially place dollars in consumers' pockets resulting in spending, which could in turn jump start the economy. Need more good news to get your motor running?

Try this: we are seeing significant inquiries at the Rogers-Lowell Chamber and throughout the community related to small business start-ups, job creation and economic development prospects. Our region's growth may have slowed with the housing market crisis and other economic stressors, but Northwest Arkansas is still a growing, nationally-competitive place to do business (and enjoy life and raise a family). Case(s) in point:

1. Cryovac, Inc. - a subsidiary of Sealed Air Corporation in Rogers - announced 21 - 24 new jobs thanks to a business expansion last month, with a total economic impact for our community of more than $1.5 million.

2. Don's Cold Storage and Transportation in Rogers is adding more than 20 competitive jobs with an expansion representing more than $7 million in economic impact for our community.

3. Enformix Technology Services will move 40 jobs to Historic Downtown Rogers upon completion of upgrades to its new facility. The company is expert in IT strategy development and information technology, particularly in the field of long-term care.

4. NWA ranked #4 on Forbes list of best places for business and careers: http://www.forbes.com/2009/03/25/best-cities-careers-bizplaces09-business-places-intro.html. Make no mistake: the heading is Fayetteville, but one glance at the population listed makes clear that these are accolades for Northwest Arkansas, and every one of our sister cities in the region has cause to celebrate!

Don't misunderstand - it's still tough in the current economic climate, and many businesses are struggling and will continue to struggle well into the coming months. But it feels good to dwell on the positive for a moment, doesn't it?

Step 2: Marketing. Whatever your position, whatever your business - it's critical. The best analogy would be Promote or Die, to adapt a line from a Chamber long-termer. When the economy contracts and things are tight, it's human nature to curtail expenses, but for the good of your business, don't irrationally cut marketing, promotion and advertising expenditures. It has often been said that those who strike while the iron is hot or, in this case, advertise in a down economy while their competitors are cutting back, have the best opportunity to thrive.

If you find yourself and your business in a situation where you have to cut back, by all means don't hide in your cave. As members of the Rogers-Lowell Area Chamber of Commerce or any other good chamber, you can still capitalize on dozens of free opportunities to market your business at no charge through business-building networking events. It will still require an investment on your part, but of time and not cash. That's time well well spent if it helps your business, isn't it?

Thanks for reading - share your good news, and be sure to connect with the Rogers-Lowell Area Chamber of Commerce to share your comments and feeback. Find us on LinkedIn (http://www.linkedin.com/groupRegistration?gid=1823711) and Twitter (@RLACC) and give us your two cents!