Metrics That Matter: Changing the Definition of Economic Development Success

926 Views

By John Lummus
President & CEO, Upstate SC Alliance

How do we measure economic development success? Is it job creation, capital investment, tax revenue? Is it a headline when a marquee company brings jobs into our region, or when a mid-sized company quietly expands its existing facility?

Do we view a community with no announcements as unsuccessful, regardless of what’s happening behind the scenes? Do we know enough about the process – beyond politicians cutting ribbons at grand openings – to evaluate and support what is actually happening in our area?

Richard Blackwell, vice president of development for industrial developer Agracel and former executive director of the Oconee Economic Alliance, posed these questions in early October at the Upstate SC Alliance’s Coffee & Conversation.

Fueled by 14 years as an Upstate economic developer, Blackwell’s presentation focused on “metrics that matter.”

The goal of economic development is “wealth creation, which gives each family in a community a better chance,” he said. “That goal makes these questions well worth asking.”

Here are some of the top takeaways:
1. “Economic development happens at the intersection of public policy and the free market system; we can only support economic growth and entice new businesses to come here with the conditions we have.”

Public policy, tax incentives, workforce development programming, and other factors that come into play are “shaped heavily by our elected officials,” Blackwell explained. The leaders a community votes into office truly do shape the opportunities brought to and won by that area.

2. “For the last 50 years, the most valued statistic has been the number of Requests for Information (RFIs), but there are far more meaningful ways” to track our success and impact in the community. An RFI is a questionnaire companies send to economic developers to collect key data, like workforce availability, wages, and connectivity. Technology has made such information more accessible, meaning a decrease in RFIs does not necessarily equal a decrease in prospect interest.

Checking in has value, Blackwell added, but only if the yardstick we’re using provides valuable insight. Ushering in new measurements will provide a clearer, fuller picture for laypeople and economic developers alike. Whether those are unemployment rates, capital investment, workforce development milestones, or other relevant statistics, Blackwell says, “We should look at economic development through a fresh lens,” not a 50-year-old one.

3. “Economic developers need to be more transparent, particularly because there is a difference between activity and results. Reaching our goals requires producing, not just doing,” Blackwell said. Jobs and capital investment are a great place to start, but full transparency will spell out the number of RFIs, leads, prospects, tours, meetings, and wins.

Tracking the expansion of existing companies is also worthwhile because “jobs provide population growth, tax revenue, and overall vitality to our communities. It’s the heart and end goal of economic development.”

In addition to becoming more transparent about their results, we should expect our developers to become more transparent about the priorities and tactics that helped them get there. “Are the leads they are chasing unlikely ones? Are they pursuing qualified opportunities for which our communities have a fair shot? We need to know that.”

4. Economic development requires a long-term, entrepreneurial view. Examining metrics like unemployment on a month-to-month basis won’t accurately portray the efforts or success of an economic developer. From 2010 to 2018, for instance, Oconee County’s unemployment rate fell from 11.4 percent to 2.7 percent, a victory by any measurement. “Month-by-month, however, there may have been upticks and downturns” that didn’t affect or clearly represent the overall trend, Blackwell said.

Taking a higher-level view by looking at unemployment levels annually allows the public and the business community to get a clearer picture of what’s truly happening. Things may tick up or down monthly, though overall trends are what shape a community in the long run.

5. Whether you are an economic developer, an elected official, or a member of the community, it is essential to ask the right questions. Are we chasing the right projects? Not just in terms of likely wins, but also in terms of quality. Are the jobs we’re pursuing high-paying ones?

Quality jobs change the community not just by improving the unemployment rate, but also by giving families financial independence and providing long-term stability. On paper, a higher number of jobs may look impressive, but in reality, the pay and potential of each job added to a community is a critical facet to examine.

Blackwell noted that the poverty level in Oconee County decreased from 19.1 percent in 2012 to 14.6 percent in 2016, but even that percentage, he said, is not a cause for celebration. Instead, it should “make us look more critically at the opportunities our economic developers pursue.”

6. Celebrate the right things. Quite often, anticipated capital investment numbers are released when a community wins a new project. While it’s thrilling to spread that news ahead of time, we should also celebrate it once the investment is completed.

Many times, explained Blackwell, “we see the capital investment increase over the life of a project, and this goes without notice” – perhaps while the public’s focus is elsewhere. Similarly, Blackwell cautioned that we should recognize and celebrate the number of actual jobs created by a project, not just its announced or anticipated positions. Oconee County, he said, had 5,000 jobs created between 2012 and 2017; these figures have weight because they “reflect actual jobs created, not projections.”

Jumps in per capita income are also worth celebrating, Blackwell added. These numbers represent “the development of the right jobs” in our area. “Poverty levels and crime rates also improve when a community has more and higher quality jobs,” added Blackwell. Those statistics may not seem to be entirely related to economic development, but they are worth celebrating when we understand how closely entwined they are.

7. “Education is at the center of economic development,” Blackwell said. Preparing the next generation of workers and offering new skills to those already in the workforce is a critical component of attracting new business and retaining current employers. A community’s schools are the “foundational layer” of its economic development, so strengthening the former will undoubtedly affect the latter.

8. Economic development is “a group effort,” Blackwell explained. Though a limited number of people in any community make their living in economic development, increased “transparency and clearer metrics will make it easier for everyone to play a role.”

9. Patting ourselves on the back now and then can keep our eyes on what matters. “The quality of a community’s economy reflects its standard of living,” Blackwell said, noting that the two are inextricably linked. Whether it’s workforce development, business retention, or upcoming public policy decisions, there is always work to be done to ensure that “what we’re celebrating lasts.” The objective of economic development is far loftier than a one-time win.
One opportunity “can change a family tree,” and it can shape a region household by household. “In fact, economic development boils down to the value” of a single job, Blackwell said. “Everything increases when you bring jobs to a community: its population, tax revenue, and property values; the number of bank accounts opened; and the quality of its schools.”
______________________
About the Upstate SC Alliance:
Formed in 2000, the Upstate South Carolina Alliance is a public/private regional economic development organization designed to market and promote the dynamic, commerce-rich, northwestern corner of South Carolina. Our mission is to position the Upstate to excel in the global economy through strategic marketing, collaboration, and thought leadership.

SHARE

Comments

Related Articles