By Mike Fitzgerald
Editor’s note: Mike Fitzgerald is President and CEO of the Denver South Economic Development Partnership. During his 45+ year career in economic development he has set up and directed trade and investment offices in Asia, Europe, the Middle East, South America, Canada and Mexico, and built teams and coalitions that have created thousands of jobs, hundreds of businesses and billions of dollars of new investment. Check back often to see what Mike has to say.
The global economy has entered a new epoch, changing the basis of economic success everywhere.
The one certainty in today’s economy is that there is no certainty. Disruption and innovation are accelerating, altering the blueprint for sustainable growth in a time of continuous change.
This is why we do economic development.
When it’s working, there is an upwards spiral where growth creates better wages and living standards for all. When economic development is working, we create the conditions that allow for people and communities to achieve their full potential.
We do this by creating what I call the ripple-out effect.
It’s not coming from the top, or the bottom, or even from the sides. It’s a process that comes from all directions, in and out and around, and continues to have positive impacts even as it travels further and further from the epicenter.
If we do it right, it will feel like the economy is full of opportunity and enabling human potential and I believe it is.
Here’s how we can create a ripple-out effect that creates an economic structure that is set up for longevity, inclusion and sustained growth:
A good living climate is a good business climate
The new paradigm is that companies looking to thrive in the information economy are moving their offices to the places where talented, creative people want to live. This flips the old paradigm on its head. Information is readily available everywhere, and no longer are workers tied to where the home office is.
And today workers are looking at quality of life indicators when deciding where they’ll be living and working, such as housing, education, childcare and environmental issues.
Investing in quality of life attracts and creates the type of workforce that brings in business, which creates more jobs, which puts money back into the local economy, which builds the tax base needed to fund the public-private partnerships that invests in quality of life in the first place.
That’s the ripple.
Investing in a healthy living climate is an indirect investment in a healthy business climate, which creates more opportunities for everyone to participate and enjoy the benefits of a flourishing economy.
Ask nearly any economist, sociologist or other expert of human culture, and they’ll likely agree that living-wage jobs and affordable housing are fundamental to creating a sustainable, equitable economy.
But solving that challenge on a national or global scale quickly becomes untenable. Meanwhile, more and more emerging markets are rising, enabled by technology and the free flow of information over the Internet, and clamoring for support in ensuring explosive growth doesn’t turn into volatility.
The ripple begins locally.
Economic development needs to start where everyone — from government, to private business to residents — comes together to collaborate on solutions. This is most efficient and productive when we start with a smaller lens, solving the unique challenges that are affected by things like geography, climate and local regulatory frameworks. The ripple-out effect works exponentially in all directions. When we start with a local project, partnering with others who are committed to creating healthy economic conditions, the ripple begins.
The organization I work for, the Denver South Economic Development Partnership, has shown that they understand the importance of addressing economic development locally. Does that make it the best model? No, but it makes it a model that is replicable elsewhere, and we’ve been able to show its efficacy.
One of our main focuses is developing more living-wage jobs. These jobs don’t just provide something to do for locals, they attract the right workforce for today’s economy.
That workforce injects additional capital back into the local economy, enabling small businesses to flourish, education to improve and more opportunities for more people to participate in the economy.
That’s the ripple-out effect, and while it starts locally, it’s also incumbent upon community leaders to share and learn from the successes — and failures — of their counterparts across the globe.
Encourage the highest payers and support small business
Creating a ripple-out effect means supporting the companies that are putting more money into more people’s hands. We’ve found this means supporting both the companies that pay the highest wages, as well as regional small businesses — and oftentimes, those go hand in hand.
We’re not talking about paying out hundreds of millions of dollars. We are talking about companies that provide stable, living wage jobs. Research has shown every high-wage, primary job acts as a multiplier, creating two to four additional jobs over time. These jobs open the door for service-providers, local businesses and retail to thrive.
And small businesses need that support. Companies with less than 500 employees account for 99 percent of employer firms, and 64 percent of new private-sector jobs, according to the U.S. Small Business Administration. Many businesses are even smaller, closer to 10 to 20 employees.
Our job in economic development is to encourage a healthy balance of taxes, rules, workforce development and quality of life that encourages high wages and supports small business. That gets the gears working, and from there the ripple effect begins to take off.
Economic development creates a virtuous cycle
When economic development is working–and everyone matters–it’s like running a dream machine. To get there, you have to start somewhere. Sure, throwing a rock in the pond will create ripples, but the ripple-out effect is even more than that. It’s more like ripples in spacetime, affecting every part of our world in positive, and sometimes unseen, ways.
Even though it will take hard work and perseverance to adapt, the new economy is an opportunity. An opportunity for businesses to thrive, for people in emerging and developing markets to participate, and for innovation to accelerate and up the quality of life for all of us, regardless of race, gender, age or any other identifier we can think up.
There’s much more to do, but beginning with these core tenets — a healthy living climate, starting locally and encouraging living-wage jobs — gets the dream machine started.