Last month, Good Jobs First released a report titled Shortchanging Small Business, in which researchers found that large companies (defined as companies with over 100 employees and/or operating in more than 10 locations) received 90 percent of the $3.2 billion analyzed from more than 4,200 economic development incentive awards in 14 states. The French adage “plus ça change plus c'est la même chose” (the more things change, the more things stay the same) has rarely seemed more apt.
Examples of cities and states throwing money at corporations are almost too numerous to count. One recent case: in 2014, the state of Nevada agreed to provide Tesla $1.3 billion in incentives to encourage investment that is supposed to result in 6,500 jobs. Even if these projections are met, that works out to a subsidy of $200,000 per job—all for a corporation whose leading shareholder, Elon Musk, has an estimated net worth of $12.4 billion. All told, state and local government subsidies to corporations total an estimated $80 billion a year. By contrast, federal community development block grants (CDBG) spending totals just over $3 billion a year.
And yet slowly but surely, a counter-tendency—based on the tenet that ultimately, successful development depends on fostering local capacity—is starting to take hold. In a sentence, that is the theme of a new Democracy Collaborative report titled Cities Building Community Wealth. The report, authored by Marjorie Kelly and Sarah McKinley, profiles 20 cities that have begun to take steps on the path of building a new community-based, economic development paradigm, creating a systems approach that fosters local capacity, local ownership, and economic and racial inclusion.
So, what does a community wealth building approach to city economic development look like and how does it work in practice? Truth be told: we don’t yet know fully. As the Good Jobs First report demonstrates, city economic development today remains largely mired in a mindset that if applied to the sports world, would be akin to putting 90 percent of your resources into free agency and only 10 percent into developing existing players. But hints of a new approach are emerging in cities across the United States.
For example, in Portland, Oregon, the Portland Development Commission has taken to using a participatory budgeting approach in which community members in targeted zones determine how best to budget city funds. Participatory budgeting has also emerged as a tool for spending CDBG funds in a number of other cities, including New York City, Chicago, Boston and San Francisco.
In Cleveland, Ohio, the City has worked with area hospital and university anchor institutions to increase contracting with local, minority, and women-owned businesses from 29 percent of contracting in 2010 to 39 percent in 2014.
You can also see the outlines of a new approach to economic development in the creation of new City offices, such as the Office of Community Empowerment and Opportunity in Philadelphia and the Office of Community Wealth Building in Richmond, Va.
In Denver, Co., the city contributed $2.5 million to a transit oriented development land acquisition fund to ensure the proximity of affordable housing to transit. To date, the nonprofit Urban Land Conservancy has raised $24 million and has helped preserve or create 626 transit-accessible affordable homes, as well as 120,000 square feet of community facilities. And Missouri and Kansas have even entered into negotiations to “end tax incentives that only move jobs from one part of the region to another.”
Community-based ownership has also gained new backing, including support for worker cooperatives in cities as varied as Madison, Wisc.; Austin, Tx.; Oakland, Ca.; and New York. New York City’s effort is perhaps the most advanced: between July 2014 and June 2015, a $1.2 million investment fostered the launch of 21 co-ops with 141 worker owner positions; in the current fiscal year, the city raised its funding to $2.1 million.
Of course, beyond individual practices, “the aim,” as Kelly and McKinley argue, “is to create a new system that enables inclusive enterprises and communities to thrive and helps families increase economic security.”
This is hard work—and, of course, it is work that community economic developers and community organizers have engaged in for decades, but what is clear is that new opportunities, be it a new industrial policy in New York City or a new department of race and equity in Oakland, are rapidly emerging. If history is any guide, one can expect to find a mix of old and new practices in such efforts. The challenge remains to call out the old, lift up the new, and, advocate a positive vision that makes community wealth building the norm.
(Photo credit: Paolo Margari, via flickr, CC BY 2.0)