As state leaders take action to help their communities recover from pandemic-induced economic devastation, they can look for new ways to create jobs and spur growth. Traditional approaches to regional economic development, which rely on attracting outside capital and talent, often fail to account for the needs of residents. The result is economic growth without economic equity that leaves behind people with low incomes; Black, Latinx and Indigenous populations; and communities with the greatest need for good jobs and increased wages.
Meanwhile, the pandemic has exposed wide disparities in the demand for workers and skills among regional labor markets and industry sectors. These inconsistencies hit workers in low-wage positions and distressed communities especially hard. For example, since the initial virus outbreak last spring, the restaurant and hospitality sector has endured massive layoffs. In contrast, white-collar fields that people can do from home have proved largely immune.
States can employ a holistic approach to revitalize regional economies, including taking an inclusive approach to economic development, expanding the availability of quality jobs, scaling regional sector strategies and making job-generating investments.
This can include targeting investments in one key area: infrastructure. States can focus on fixing crumbling infrastructure, such as roads, bridges and water systems and can provide equitable access to reliable high-speed internet service — a vital infrastructure needed in the 21st century economy. The lack of adequate infrastructure, both physical and digital, threatens to lock in structural inequities and hamper long-term economic growth.
An inclusive approach to infrastructure investments creates new economic pathways for residents of underserved neighborhoods by generating new jobs on construction projects, which would stimulate the broader economy and foster even more job creation. Improvements in broadband access can expand options for new business ventures and remote work.
North Carolina has an ambitious broadband initiative called Connecting North Carolina that will provide affordable high-speed internet service to every North Carolina resident by June 2021. State officials believe that building this critical infrastructure will put North Carolina in a strong position to prepare its workforce for 21st century jobs, increase the efficiency and effectiveness of small businesses, and enable new health care technologies and service models. This initiative was spurred through 2015 state legislation that requires a broadband expansion plan be put in place for the state.
Employers also play a key role in revitalizing regional economies. States can encourage employers to create good jobs that pay family-supporting wages and benefits. Employers can increase their investments in upskilling and other educational incentives that help employees gain the skills necessary for today’s changing economy. New Jersey’s 2021 Economic Recovery Act focuses on this by providing tax credits to employers who enrolled 10% or more of their employees in training programs. The legislation also creates an economic growth fund that can be used to support training, among other uses.
Supporting small businesses is another piece of the puzzle. States can invest in research and technology to encourage, incubate and accelerate the growth of entrepreneurs and small businesses while bringing capital — in addition to low-cost loans — to entrepreneurs to help rebuild and diversify economies. In Texas, the state legislature funded BIGAustin to help empower underserved Texans to develop their entrepreneurial skills and help small businesses thrive by providing education, counseling and capital. In recent years, BIGAustin has aided the development of high-tech and entertainment businesses as the region adapts to the 21st century economy.
States can also build on efforts to support small businesses by establishing regional partnerships with higher education institutions to provide incubation opportunities, counseling and consulting services to spur local entrepreneurship and small business development. They can further strengthen relationships between higher education and the workforce by aligning state postsecondary attainment goals with workforce needs and industries that drive economic growth in their state.
Ultimately, by targeting investments and limited resources to communities that need them most, states can build larger, stronger and more resilient economies to broaden economic activity and opportunity.
To learn more about the strategies mentioned in this post, visit JFF’s State Policy Road Map for an Equitable Economic Recovery.