Clearly economic development is just one component of state and regional economic policy and programming. It almost certainly is less important to economic well-being than the quality of the human capital development system from birth through college.
Having said that, the design of economic development programming matters. So, let’s look at the lessons Michigan should learn from leading-edge states and regions in order to grow, retain and attract far more family-sustaining jobs:
Lesson 1: The primary goal of economic policy should be rising income for all Michiganders. In Michigan’s strong pre-pandemic economy, 43% of households — most with a working adult — could not pay for basic necessities. When more than 4 in 10 Michigan families are not succeeding, our state is not succeeding.
Lesson 2: Place attracts talent and talent equals economic growth. So placemaking — creating a place where people want to live and work — is key to economic well-being.
In “Triumph of the City,” Harvard’s Edward Glaeser writes: “The bottom-up nature of urban innovation suggests that the best economic development strategy may be to attract smart people and get out of their way.”
Attracting smart people and getting out of their way isn’t the way Michigan and its various regions do economic development today. The focus, almost exclusively, is on attracting business investment through some combination of being a low-cost place, providing investment-specific incentives and business-assistance programming.
And yet the evidence is on Glaeser’s side. The fact is that the single best predictor of regional and state prosperity is the proportion of adults with a four-year degree or more. Concentrated talent is what attracts high-wage employers. Talent also is entrepreneurial, so where it is concentrated are the places with the most high-wage business startups. The new economic reality is that the path to prosperity for states and regions is human-capital driven. The asset that matters most to employers — particularly high-wage employers — is talent.
Lesson 3: A region’s human-capital assets, not what is included in the offer for a specific business investment opportunity, are central to being economic development competitive.
Northern Virginia’s winning Amazon HQ2 proposal offered cash incentives far less than offered by metro Grand Rapids and metro Detroit. What the region did offer Amazon — which matters far more to high-wage employers — is an area with talent concentration, being welcoming to all, and a quality of place that is an attractive place to live and work. Working on creating these characteristics on an ongoing basis is what matters most to growing, retaining and attracting good-paying jobs.
Lesson 4: Winning in the 21st century is led by public investment. Creating places where people want to live and work is driven by quality basic services, infrastructure and amenities. Yes, those public investments must be paid for, which inevitably means higher taxes. But those taxes pay for services and amenities that are both important to improving the quality of life of current residents and are a vital to future economic growth, particularly growth of high-wage jobs.
Lesson 5: Welcoming to all is a core characteristic of high-prosperity regions. That is because talent is both diverse and mobile. If a place is not welcoming, it cannot retain and attract talent. People will not live and work in a community that isn’t welcoming. That means providing everyone with basic civil rights and treating everyone the same no matter where they are born, their sexual orientation, race, religion or ethnic background.
Lesson 6: Placemaking must benefit both current and future residents. The data are clear that the most prosperous places across the country are those with the largest talent concentrations. And that mobile talent is choosing to live in places with quality basic services, infrastructure and amenities. But the economic development needed to retain and attract mobile talent should not be at the expense of current residents.
For communities this must be a both/and — not an either/or — proposition. Both current and future city residents should be provided with quality basic services, infrastructure and amenities that make the city an attractive place to live, play and work.
Turns out that both current residents, across race and class, as well as potential new residents all want walkable urbanism. Communities can do both/and placemaking. And when they do, the result is a place that both improves the quality of life for current residents and attracts mobile talent that drives future economic growth.
For Michigan and its various regions to be competitive with leading-edge communities, we need to completely redesign our economic development strategy and practice. If Michigan is to retain, attract and create high-paid 21st century jobs, it will require making places where talent wants to live, play and work the priority.
Lou Glazer is president of Michigan Future Inc.