Jobs, jobs, jobs. Despite 88 straight months of job growth, it’s still a major priority in our communities. It’s also the promise of almost every politician.
Obviously, if it were that easy to create jobs, it wouldn’t continue as a concern in communities across the country. And it is not just any job that counts — people need jobs that provide a sustainable wage and benefits like health insurance, retirement planning, sick days, and vacation time.
But creating jobs is actually a complex challenge, especially in areas that have lost major industries that used to support them. Driving through Lorain can almost bring one to tears with all the empty buildings and idle factories. It’s not unlike hundreds of other communities across the country, including most that rose to prominence built on industries like steel, coal, and automobiles. Towns that relied on manufacturing for taxes and jobs are suffering.
So, when it comes to reviving a community, what comes first: the businesses that improve them or the people who welcome them?
Companies need infrastructure so that employees and patrons can easily travel to their business. They need safety because they don’t want to have to worry about being robbed and customers need to feel safe to shop. They need customers who have disposable income to spend — a great product at a great price is useless if customers don’t have the money to buy it. They need an educated and skilled workforce. Cities are relentlessly competing for businesses, which are looking for economic advantages, whether it is tax breaks or other incentives. A successful retail district benefits other thriving businesses.
Communities and the governments that run them likewise need jobs. Jobs provide the income necessary to support local businesses. Jobs also provide taxes to government, which will be able to provide infrastructure needs and safety assurances that businesses need. An increase in income often means nice neighborhoods and increasing home values as houses are fixed up or new developments are built. Nicer homes and nice communities attract people with the skills necessary to build a reliable workforce.
In order to improve safety and infrastructure, cities need more money, often in the form of taxes. But if the communities can’t afford to pay more, you can’t tax them into poverty. At the same time, if the city becomes more run down because it cannot afford to improve infrastructure and safety, then it is going to have a hard time attracting the businesses that will provide jobs and generate tax revenue.
So if you can’t improve your community through taxes because people can’t afford them, then it’s difficult to attract business that might make paying more taxes affordable.
Going backward is rarely a realistic opportunity. While businesses often go back to their core values, it is difficult for government and communities. The world moves too fast. There is too much competition and too many alternatives. This problem, of course, is the availability of cheap labor throughout the world and a company’s willingness to move to acquire it.
The theory of economies of scale is built upon finding the cheapest labor, infrastructure, and natural resources to build a business, lowering the cost of production and improving the ability to compete against other businesses in a capitalistic society.
So, what happens when a community loses its competitive advantage in a market like steel? Some suggest tariffs, but tariffs raise prices. It might be good for American steel workers but it is not good for those who purchase steel. For free market purists, it is a loss in efficiency. It’s why people support capitalism so long as it works for them. Cheaper imported steel is the definition of a free market society and capitalism. For American steel companies to compete without tariffs often requires lowering wages (or going out of business). Profit becomes a race to the bottom.
Communities looking for economic recovery often need to reinvent themselves. They need to adopt a new identity, maximizing any economic advantages it might have, such as new technology, alternative industries, or using its natural resources. And like any business, government needs to invest in itself to attract those opportunities. It must balance the needs and economic situations of its citizens with the cost of improving the community to attract business. For this, it needs dedicated public officials willing to work tirelessly to attack this quandary from all angles.
It also needs committed citizens to take pride in their city, even in difficult times, to attract opportunities.
I fully agree with the author of the following article. Rob, I'd like to admit that your points are solid and strong! You must be the one who truly understands this issue...ReplyDelete