2014 10-14 portland conference - portland, or
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Metropolitan Policy Programat BROOKINGS
CHARTING A NEW PATH TO GROWTH AND PROSPERITYImplications for a Blueprint for the Regional Economy
Portland, OR • October 14, 2014Metropolitan Policy Programat BROOKINGS
@BrookingsMetro@Amy_Liuw
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Metropolitan Policy Programat BROOKINGS
-10,000,000
-5,000,000
0
5,000,000
2007 2009 2014
Post-Recession U.S. Jobs Gap Since start of recession
On the Surface, the Economy Has Recovered from the Great Recession
Source: Current Employment Statistics.
+865,000 jobs
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Metropolitan Policy Programat BROOKINGS
-10,000,000
-5,000,000
0
5,000,000
2007 2009 2014
However, We Still Face a Growth Problem
Source: The Hamilton Project analysis of Congressional Budget Office and Current Employment Statistics data.
5.6 millionmissing jobs
Payroll Count Jobs Gap Growth-Based Jobs Gap
Post-Recession U.S. Jobs Gap Since start of recession
3
Metropolitan Policy Programat BROOKINGS
-5%
40%
1990 2000 2012
0%
10%
20%
30%
40%
0%
36%
0%
-4%
We Also Face a Wealth Problem
Change in Output Per Capita and Median Household IncomeSince 1990
Output Per Capita Median Household Income
Source: Current Population Statistics, BLS Consumer Price Index, Census Population Estimates, Moody’s Analytics.
Output per capita: +$14,589
Median income: -$2,120
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Metropolitan Policy Programat BROOKINGS
Finally, We Face an Inclusion Problem
Source: Current Population Statistics.
Unemployment Rate by AgeRecession through 2013
23%
16%
16 to 19years old
2007 2012
6%4%
0.4%
31.4%
Top 1 Percent Bottom 99 Percent
Income Growth During Recovery2009-2012
Source: Saez and Piketty, “ The Evolution of Top Incomes in the United States,” 2013.
13%
8%
20 to 24years old
2007 2012
25 and Older2007 2012
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Metropolitan Policy Programat BROOKINGS
Regions will be key to delivering inclusive growth and opportunity
The U.S. needs a new model of economic growth
Regional leaders must embrace new “habits” of economic development to improve prosperity
1 2
1
2
3
3
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Metropolitan Policy Programat BROOKINGS
1 22 33
The U.S. needs a new model of economic growth1
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Metropolitan Policy Programat BROOKINGS
CONSUMPTION
DEBTSPECULATION
DEBTDEBTCONSUMPTION
SPECULATION DEBTDEBT
CONSUMPTIONDEBT
Pre-Recession Economy
HUMAN CAPITALINNOVATION
MANUFACTURING
INFRASTRUCTURE
STEM
ADVANCED ENERGY
EXPORTS
R&DOPPORTUNITY
Next Economy
We Need New Growth Strategies
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Metropolitan Policy Programat BROOKINGS
Globalization DemographyTechnology
At the Same Time, We Need to Adapt to Macro Forces
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Metropolitan Policy Programat BROOKINGS
5.9%North America
53.2%China & India
Global Competition Is Fierce, with Growth Shifting Away from the United States
2050
Middle Class Consumption
Source: Homi Kharas, “The Emerging Middle Class in Developing Countries,” OECD, 2010.
US Canada Mexico
20.2%US
2013 – 2019
Share of Global Economic Growth
30.1%BIC Countries
Source: International Monetary Fund, World Economic Outlook Database, October 2014.10
Metropolitan Policy Programat BROOKINGS
$33 trillion/YEAR
McKinsey & Company:
maximum estimated global economic impact of 12 technology platforms through 2025
Technological Advances Are Rapidly Disrupting Labor Markets
Source: James Manyika and others, “Disruptive Technologies,” McKinsey & Co., 2013
Share of U.S. Jobs at Risk of Automation
2013 – 2033
47%
Source: Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment,” 2013.11
Metropolitan Policy Programat BROOKINGS
The United States Is in the Midst of a Huge Demographic Shift
24.5%
minority population share of U.S. workforce by 2038
Source: Brookings/William Frey analysis of U.S. Census 2010 data.
53.7%
today’s U.S. workforce that will reach retirement age by 2030
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Metropolitan Policy Programat BROOKINGS
Bachelor’s Degree Attainment2012
Rapid Diversification Currently Comes with Wide Educational Achievement Gaps
Source: Brookings analysis of American Community Survey data.
29.1%
Total Asian
50.5%
32.5%
18.7%13.8%
White Black Hispanic
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
TalentTrade Innovation
Leaders will invest in the drivers of growth and prosperity.
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Metropolitan Policy Programat BROOKINGS
Trade Supports Jobs in Non-Traded Sectors
Traded-Sector Job
=Local-Serving
Jobs
Source: Ezell, Stephen and Robert Atkinson, 2012, “Fifty Ways to Leave Your Competitiveness Woes Behind,” ITIF.
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
29.9%
8.1%
Share of GDP Growth
‘09-‘13
Share of Job Growth
‘09-‘13
Global Trade Creates Jobs, Generates Income, and Supports High Wages
Metropolitan Policy Programat BROOKINGS
International Exports’ Economic Impact
Sources: Moody’s Analytics; Brookings “Export Nation”; J. Bradford Jensen, “Global Trade in Services,” Petersen Institute for International Economics, 2011; David Riker, “Do Jobs in Export Industries Still Pay More?” ITA, 2010.
17.0%
Manuf. Trade Wage
Premium
Services Trade Wage
Premium
20.0%
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
Portland
Global Trade Creates Jobs, Generates Income, and Supports High Wages
Metropolitan Policy Programat BROOKINGS Sources: Moody’s Analytics; Brookings “Export Nation”; J. Bradford Jensen, “Global Trade in Services,” Petersen
Institute for International Economics, 2011; David Riker, “Do Jobs in Export Industries Still Pay More?” ITA, 2010.
32.0%
Export Growth‘09 – ’12
Export Job Growth‘09 – ’12
14.9%
Metropolitan Policy Programat BROOKINGS
14.1%
25.9%
ExportGrowth‘09 – ’12
Exports Job Growth‘09 – ’12
International Exports’ Economic Impact
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Metropolitan Policy Programat BROOKINGS
4.4%
13.2%
24.4%
8.6%
Share of Output
Share of Jobs
Global Trade Creates Jobs, Generates Income, and Supports High Wages
Metropolitan Policy Programat BROOKINGS
International Exports’ Economic Impact
Sources: Moody’s Analytics; Brookings “Export Nation”; J. Bradford Jensen, “Global Trade in Services,” Petersen Institute for International Economics, 2011; David Riker, “Do Jobs in Export Industries Still Pay More?” ITA, 2010.
Metropolitan Policy Programat BROOKINGS
Share of Output
Share of Jobs
Portland
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Metropolitan Policy Programat BROOKINGS
Innovative Industries Drive Value Creation and Productivity Growth
60.0%
PatentsGDP
Advanced IndustriesShare of U.S. Totals
37.9%
Share of GDP Growth
’09 – ’13
14.5%
Share Job Growth
’09 – ’13
81.3%
R&D
8.8%
Jobs
17.8%
Engineers
30.3%
*Advanced Industries spend over $450 on R&D per job annually and over 20 percent of jobs are in STEM occupations. Source: Brookings Institution forthcoming.
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
Innovative Industries Drive Value Creation and Productivity Growth
Advanced IndustriesShare of U.S. Totals
*Advanced Industries spend over $450 on R&D per job annually and over 20 percent of jobs are in STEM occupations. Source: Brookings Institution forthcoming.
Metropolitan Policy Programat BROOKINGS
10.9%
39.5%
74.9%
19.3%
81.3%
60.0%
30.3%
GDPJobs Share Job Growth
’09 – ’13
Share of GDP Growth
’09 – ’13
R&DPatentsEngineers
Portland
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Metropolitan Policy Programat BROOKINGS
$57$50
$70
$29
$74
$53
$93
$45
Talent Drives Prosperity and Fuels Innovation and Productivity Growth
High schoolor equivalent
Associatesor some college
Bachelors Graduate
Non-STEM STEM
Source: Jonathan Rothwell, “The Hidden STEM Economy,” Brookings, 2012
Median Annual Wages by Education and OccupationIn 1,000s
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
Jobs in STEM Fields Are Growing and Accessible
Metropolitan Policy Programat BROOKINGS
20%
50%
STEM Jobs as a Share of All Jobs
Share of STEM JobsRequiring 4-Year Degree
Source: Jonathan Rothwell, “The Hidden STEM Economy,” Brookings, 2012
26 millionSTEM Jobs
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Metropolitan Policy Programat BROOKINGS
Jobs in STEM Fields Are Growing and Accessible
Metropolitan Policy Programat BROOKINGS
21%
54%
STEM Jobs as a Share of All Jobs
Share of STEM JobsRequiring 4-Year Degree
Source: Jonathan Rothwell, “The Hidden STEM Economy,” Brookings, 2012
201,820STEM Jobs
Portland
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Metropolitan Policy Programat BROOKINGS
Infrastructure and Governance Enable Economic Growth and Prosperity
Infrastructure Governance
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Infrastructure Should Enable Economic and Social Outcomes
Trade Accessibility Connectivity
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Metropolitan Policy Programat BROOKINGS
Governance
Infrastructure
TalentInnovation
Trade
ProsperityEnablers
Together These Key Drivers Create Opportunity, Productivity, and Prosperity
Source: Brookings Institution, RW Ventures, and McKinsey and Company.26
Metropolitan Policy Programat BROOKINGS
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2
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Regions will be key to delivering inclusive growth and opportunity
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Metropolitan Policy Programat BROOKINGS
Metropolitan Policy Programat BROOKINGS
The U.S. Economy Is Made Up of a Network of Diverse Metro Economies
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
Post-Recession Jobs Recovery by Metro AreaPre-Recession Peak to 2014Q2
RecoveredNot recovered
Denver+5.5%
Grand Junction-8.8%
Portland+1.6%
Detroit-9.0%
Cleveland-3.8%
The Economic Challenges Vary
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Metropolitan Policy Programat BROOKINGS
Change in Employment Ratio of Working-Age Population2007 to 2013
IncreasedDecreased 0 - 3 pointsDecreased 3 or more points
Denver-1.21
Portland-2.31
Detroit+0.4
Cleveland-1.65
The Economic Challenges Vary
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Metropolitan Policy Programat BROOKINGS
Metropolitan Policy Programat BROOKINGS
The Largest 100 Metro Areas Concentrate Our National Assets
Metropolitan Policy Programat BROOKINGS
31
Metropolitan Policy Programat BROOKINGS
75%GDP
66%population
12%land area
The Largest 100 Metro Areas Concentrate Our National Assets
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Metropolitan Policy Programat BROOKINGS
Bachelor’sDegrees
74%
92%
PatentsPopulation
66%75%
GraduateDegrees
90%
AdvancedIndustries
*The 100 largest U.S. metropolitan areas.Source: Brookings analysis of US Census Bureau, FAA, BLS, and BEA data.
Largest Metros’ Share of U.S. Market Assets*
The Nation’s Key Economic Drivers Are Concentrated in Metro Areas
Air Freight
82%
ServicesExports
72%
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Metropolitan Policy Programat BROOKINGS
“Something has gone terribly wrong when the biggest threat to our American economy is the American Congress.”
Senator Joe Manchin III“I am embarrassed and ashamed of Congress and the unnecessary harm that is being inflicted on our citizens and country.”
Senator Joe Manchin III
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Metropolitan Policy Programat BROOKINGS
Cities and Metros
Feds
States
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Metropolitan Policy Programat BROOKINGS
1 21 2 3
3 Regional leaders must embrace new “habits” of economic development to improve prosperity
36
Metropolitan Policy Programat BROOKINGS
“Without economic development, economic growth is limited.”
— Dr. Maryann Feldman Heninger Professor of Public Policy at UNC Chapel Hill
Source: Maryann Feldman and others, “Economic Development: A Definition and Model for Investment,” Working paper, 2014.37
Metropolitan Policy Programat BROOKINGS
Traditional Approaches to Local and Regional Development Are Insufficient
Starbucks Stadia Stealing Businesses
Metropolitan Policy Programat BROOKINGS
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Metropolitan Policy Programat BROOKINGS
Local Economic Developers Need to Focus on the Real Sources of Job Growth
Source: Jed Kolko, “Business Relocation and Homegrown Jobs, 1992-2006,” Public Policy Institute of California, 2010.
56.3%job creation from startups
1.9%job creation from attraction
41.8%job creation from firm expansion
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Metropolitan Policy Programat BROOKINGS
Dozens of Metro Areas Are Pursuing Transformative Approaches
PortlandExport Plan
Los AngelesLA 30/10
HoustonNeighborhoodCenters
New York CityApplied Sciences
Northeast OhioManufacturing
Network
DenverFasTracks
ChicagoBusiness Plan
DetroitInnovation District
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Metropolitan Policy Programat BROOKINGS
7 Habitsof Highly Effective Regional Leaders
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
AssetsRegion
Habit 1: Embrace Regional Markets
20thlargest metropolitan economy in the United States
Portland:
Metropolitan Policy Programat BROOKINGS
2 states
2 satellite cities
7 counties
110 communities
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
Assets
Habit 2: Compete on Value, Not Cost
Value
Metropolitan Policy Programat BROOKINGS
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
Assets
Habit 3: Prioritize People, Not Just Profits
People
Metropolitan Policy Programat BROOKINGS
“Leaders with longer perspectives understand that companies can’t thrive
for long while their workers and their communities struggle.”
“Unless you have the right skilled people, you’re just wasting your money
on technology and equipment.”
— Michael Porter
— GE Executive
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
Assets
Habit 4: Invest in Market Assets, Do Not Just Recruit Them
Assets
15,536
23,158
Source: Brookings and research partners’ analysis of NETS data on inter-metropolitan firm relocations in a large name-withheld midwest metropolitan area.
Impact of Relocating Firms*2004 – 2009
$146,488$127,654
IN OUT IN OUTMove-related Jobs Sales Per Job
800,000 sq ftintegrated research, development, prototyping and educational facilities
$1 billionfrom State of New York
$13 billioninvested by 300+ affiliated firms
2,600 R&D jobs on siteFocus on nanotechnology “cluster” is building a base of manufacturers, suppliers and engineering facilities - including a $4.6 billion investment from Global Foundaries in Saratoga County
Metropolitan Policy Programat BROOKINGS
Albany Nano-Tech
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
Assets
Habit 5: Invest in Trade, Not Consumption
Trade
2%tradable sectors’ share of net job growth in the U.S. between 1990-2008
Michael Spence, “The Evolving Structure of the American Economy,” CFR, 2011
Metropolitan Policy Programat BROOKINGS
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
Assets
Habit 6: Build Networks Instead of “Going Alone”
Government Economy
Networks
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Value TradeRegion People Networks Outcomes
Metropolitan Policy Programat BROOKINGS
Assets
Habit 7: Track Long-Term Outcomes, Not Just Short-Term Tactics
Outcomes
Track What MattersObjective: Improve economic and governance capacities to move regional economies onto a faster, more sustainable long-term growth trajectory.
Performance Metrics: • Economic Growth
• Jobs, Output, Startups• Wealth and Income
• Productivity, Output per capita, Wages, Income• Equity and Inclusion
• Labor Force Participation, Unemployment, Socio-Economic Disparities
vs. Traditional Metrics
Source: withheld.
“High performance economic development is the dedicated pursuit of any objective, no matter what the current objective may be, coupled with measured progress along the way.”
Performance Metrics: • website unique visits• conversations with companies that are relocating
or expanding• jobs announcements• investment announcements • jobs created per week
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Metropolitan Policy Programat BROOKINGS
“Begin with the end in mind.”
— Dr. Stephen R. Covey Author, “Seven Habits of Highly Effective People”
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Metropolitan Policy Programat BROOKINGS
ECONOMIC DEVELOPMENT IN THE NEXT ECONOMYCharting a New Path to Growth and Prosperity
Portland, OR • October 14, 2014Metropolitan Policy Programat BROOKINGS
@BrookingsMetro@Amy_Liuw
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