First Blog in Three Part Series: Reflections from Community Leaders Forum

CLFBelow is the first of three blogs, that will be posted over a month, reflecting perspectives on the Fed’s Community Leaders Forum, which took place on March 5 and 6 in Washington DC.  Our guest bloggers in order of posting are Michelle Hoereth of IFF, Renee Hatcher of the Chicago Lawyers’ Committee for Civil Rights, and Sarida Scott of the Community Development Advocates of Detroit.

A key purpose of the Community Development function in the Federal Reserve System is to document trends, observations, and concerns of organizations serving consumers and communities.  Information we gather informs our programmatic and research agendas.  To that end, we invite perspectives of both newer and well-established private sector community development organizations, and build relationships with long-tenured as well as emerging leaders in the field.

The Community Leaders Forum, organized by the Federal Reserve Board of Governors, and the Federal Reserve Banks of St. Louis and Chicago was a dialogue with emerging leaders, and we are grateful for their participation and thoughtful input.  The goals of the forum were to:

  • Strengthen the community development function through peer-to-peer learning that promotes applied research and innovative community strategies; and
  • Improve the Federal Reserve’s understanding of emerging trends and their impact on consumers and communities, in particular those traditionally under-served.

By Michelle Hoereth

In March 2014, the Federal Reserve Board hosted 13 rising community leaders from across the Midwest region for a peer-to-peer exchange. The goal of the meeting was to promote applied research and encourage innovative strategies to address the current trends in the communities that we all serve.  As a participant in the two-day meeting, I returned home with renewed energy and optimism about the future of community development, but also with a greater appreciation for the broader, systemic challenges we face in trying to create sustainable communities.

For most community development professionals, our commitment and passion for the field has not wavered over the years, but the tools in our toolbox seem to either not work quite as well or simply just are not enough.  We are constantly grappling with whether capital resources are shrinking or whether the problems in our communities are just continuing to grow.  Many of us acknowledge that we have become very sector driven, which has led to a narrow focus on a “single” problem that plagues a community.  We have backed away from the challenge of thinking more comprehensively about community solutions, which requires a “re-tooling” of our toolbox.  Perhaps the focus on one major issue at a time is less about a “retrenchment” from the challenge and is just simply more pragmatic.  Maybe our work is a function of available resources and the real innovation around community solutions must come from a multitude of strategic partnerships.

It was an incredibly enlightening meeting with several key takeaways.  The first takeaway is that there were key themes that surfaced from state-to-state – economic development, the link between transportation, employment, and affordable housing, asset building, and rebuilding communities.  Each theme was loaded with several sub-themes, but the major takeaway is that we all share these exact same experiences in our prospective cities and we need to collectively think about advancing the conversations towards a comprehensive solutions-based approach.

The second major takeaway is the need for greater innovation and creativity to move the community development pendulum to a point of sustained progress and success. Each city “representative” at the two-day meeting eloquently spoke about innovation across many sectors they are spearheading in their towns.  The challenge to us is to now find a way to bottle up that innovation and use it to help strengthen and in some cases rebuild our communities across all sectors.

The 13-member team of rising leaders also had the opportunity to spend time with Governor Sarah Bloom Raskin and discuss many of these emerging issues.  All of these issues seemed to resonate with the Governor and her responses and comments to our questions came from a place of sincerity and conviction that the Federal Reserve is committed to creating solutions.

At the conclusion of our meetings, without a doubt, we all increased our understanding of the broader community development issues that impact each of our cities.  With several Federal Reserve staff on hand, including two from Chicago, our discussions were productive, educational, and informative, to say the least.  We all ended the day thinking about how to re-tool our toolbox and approach our work from the perspective of trying to get out in front of the issues rather than continuing to play catch-up.  The community development field requires smart, innovative, and creative minds now more than ever and we all left feeling like 13 of those great minds just spent the last 48 hours together.  This would not have been possible without the Federal Reserve’s commitment to understanding our issues and being local engaged partners.

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The Chicago Cook Workforce Partnership – A Showcase for Collaboration

By: Emily Engel and Jason Keller

Outreach into the communities that Community Development and Policy Studies (CDPS) serve have stressed the continued need for coordinated workforce development efforts in the Seventh District. To gain a broader perspective on these issues as well as other conditions impacting low- and moderate-income (LMI) populations and communities surrounding the city of Chicago, CDPS recently visited the Chicago Cook Workforce Partnership (the partnership). 

Introduced in July 2012, the partnership is a result of a coordinated effort between Cook County and the city of Chicago to broaden the reach of workforce development services for employers and job seekers by reducing costs, improving services, and engaging the business community. “As a human resource pipeline, The Partnership works with businesses, community colleges, workforce centers and delegate agencies to maximize human capital for high-demand industries including Healthcare; Hospitality; Information Technology; Manufacturing; Retail; Transportation, Distribution and Logistics; Business and Professional Services, and other important sectors of the area economy.”[1]

The partnership focuses on four different groups:  job-seekers; youth; employers; and the community. Each group’s needs are met through a myriad of tools including career counseling, basic skills assessments, and targeted rapid response workshops.  Throughout Cook County, there are ten workforce centers and two satellite centers, as can be seen on the map below[2].  The services offered at each center are free of charge.

Cook Workforce 1

Its services are available to all residents and businesses within Cook County, including Chicago and over 130 municipalities.  The partnership has recently focused on numerous policy changes that better align occupational training services with current and projected business needs. Through its Business Relations and Economic Development Team, the partnership has amplified private sector awareness of the region’s workforce resources and has led to deeper business engagement.  An example of an expanding initiative is the new On-The-Job Training program where businesses are not only reimbursed for up to 90% of new employee wages and the costs of training, but the training is designed to match qualified applicants with actual job openings.

On a quarterly basis, the partnership produces reports such as “Where are the Jobs?”  These reports pull information from Internet job boards to analyze where the jobs are and who is hiring in Cook County.  The top job postings by occupation and by top employers can be seen below from the partnership’s 2013 Report: 4th Quarter. [3]  This data helps public and private officials, economists, academics, and others to better understand hiring needs across the region.

Cook Workforce 2

After a recent meeting with the partnership’s CEO, Karin Norington-Reaves, CDPS learned that in its first year of operation the partnership worked with nearly 50 delegate agencies in administering $50 million of grant money while providing services to approximately 140,000 people.

Other banks within the Federal Reserve System are also working on workforce development issues around the country.  The Federal Reserve Banks of Atlanta and Kansas City are sponsoring a national conference “Transforming the U.S. Workforce Development Policies for the 21st Century.”

 


[1] Chicago Cook Workforce Partnership, Overview & Resources, available at: http://www.workforceboard.org/media/1226/ccwpbrochurev20.pdf

[2] Locations on map can be seen in the Chicago Cook Workforce Partnership, Overview & Resources, available at: http://workforceboard.org/media/1226/ccwpbrochurev20.pdf

[3] Where are the Jobs in Cook County?; Quarter 4, 2013, A summary of local job postings by occupation, employer, and skills needed, available at: http://www.workforceboard.org/media/5357/where-are-the-jobs-q4-2013_final.pdf

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Community Development and Policy Studies (CDPS) Update

In the course of Community Development and Policy Studies (CDPS) field work on varying projects throughout the Seventh District, CDPS contacts – in varying contexts – have voiced concerns that there is a lack of up-to-date skills among the unemployed. To gain a broader perspective on these concerns as well as other conditions impacting low- and moderate-income (LMI) populations and communities, CDPS conducts regular surveys of people representing organizations that serve these populations and communities in varying ways. Our survey respondents represent organizations in the fields of real estate development; facilities financing; financial counseling; economic development; banking; consumer advocacy; small business development; philanthropy; law; higher education; agriculture; manufacturing; and human services. This blog is a summary of responses from the latest CDPS Survey.

Most contacts underscored that many people in their community lack the skills needed to fill current positions in the workplace. While the manufacturing sector reported the biggest worker/skill shortage, other contacts mentioned the scientific and financial industries in particular as having trouble finding qualified applicants to fill open positions. One possible explanation for this mismatch is that schools stress the importance of college and often ignore vocational skills. Few students look into trade schools to help them learn the highly technical skills required for manufacturing jobs.

However, community colleges and companies are trying to help close the gap by changing their curricula. Contacts noted that community colleges are tailoring their classes to actual job openings, for example: offering welding classes; developing short term training programs to address the immediate need for specific machinists including CNC operators, welders, and industrial maintenance technicians; creating relationships with high schools to bring back vocational training; and coordinating with employers to make sure they are teaching the required skills.

Contacts mentioned the need for the employees to have basic skills and be ‘trainable’ for a company to invest into the workers future. If the employee has the basic skills then many companies are willing to train them. Additionally, a few contacts noted that training was also done through mentoring programs within the company. However, one contact noted that with the high unemployment rate (IA: 4.2%; IL 8.6%; IN: 6.9%; MI: 8.4%; and WI: 6.2% as of December 2013) they have grown accustomed to having over-qualified job seekers apply for their open positions.

CDPS has looked into the skill gap in the past and how community colleges have looked for ways to address it in a recent ProfitWise News and Views article “Community Colleges and Industry: How Partnerships Address the Skills Gap“. The department will continue to look into the skills gap in the future.

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Villard Square: Innovative Affordable Housing in Milwaukee Developed by Northwest Side CDC and Financed by BMO Harris and IFF

By: Emily Engel

After eight years in the making, The Villard Square GrandFamily Apartments, a first of its kind in Milwaukee, Wisconsin, opened in 2011.  This apartment complex focuses on a giving “grandfamilies” an affordable housing option. Grandfamilies are “families headed by grandparents and other relatives who share their homes with their grandchildren, nieces, nephews, and/or other related children.”[1] 

The Northwest Side Community Development Corporation (NWSCDC, profiled in a 2011 PNV article), which laid the groundwork for the project over several years and secured low-income housing tax credits and helped secure construction financing of $1.285 million from BMO Harris.  The bank construction financing would have been all but impossible to obtain, however, without a commitment for permanent (18-year-term) financing from IFF.  IFF is one of only a handful of CDFIs nationwide with the business model and financial heft to provide such long-term financing. [2] The library’s financing came from municipal bonds and new market tax credits.  

Across the United States 5.8 million children live in homes headed by grandparents. This number jumps to 7.8 million if you include homes headed by relatives other parents.[3] According to the 2010 Census, 78,351 children in Wisconsin (5.9 percent of all kids in the state) under age 18 live in homes where a grandparent or another relative heads the household.  Of those, 25,617 children live in homes headed by a grandparent.[4]  There is more information about grandfamily developments across the country in the “GrandFacts State Fact Sheet” posted on the AARP website

Grandparents raising grandchildren have to deal with generational differences as well as logistical, economic, and legal issues.[5]   In a tradeoff between time and income, younger grandparents may be forced to retire early, while older grandparents with fixed incomes may struggle to absorb costs of parenthood. Custody and guardianship can present hurdles and expenses stemming from the “lack of legal authority to make medical, school-related, and other decisions regarding their grandchildren.”[6]  Many grandparents also lack familiarity with generational norms of very young people. Finally, seniors often seek housing amenities for diminished mobility and emergency services, while children require space to run around and play.  With this demographic growing, NWSCDC together with Gorman & Company, envisioned a place where grandparents could raise their grandchildren in a safe environment that meets the needs of both generations. 

Villard Square amenities include a movie theater, community room, roof top deck and play area, fitness center, on-site supportive services liaison, [7] and a branch of the Milwaukee Public Library. Additionally, to make the complex more accessible to grandparents, the hallways are wide and have handicap accessible railings.  Also, all bedrooms have emergency pull cords.  The complex has features that cater just to the grandchildred including a playroom and on-site tutoring. [8]  The grandmother and grandson featured in the video explain why they enjoy living in this unique community.  This video also explains how this grandfamily-oriented residential complex has positively impacted the community.  For the first time in many years library card issuance has increased; Villard Square residents use the library as a both learning resource and community center.   

Other organizations involved in the center include Jewish Family Services, which coordinates social services and connects residents with local community resources.  In a press release at the time of opening of Villard Square, Sylvan Leabman, JFS President/CEO said, “We are excited about this new housing option that will create a unique intergenerational community for older adults and their grandchildren. We are pleased to be a part of a project that is the first of its kind in Milwaukee, where we will help fulfill the needs of non-traditional families.”[9]

Notably, all of the library metrics have increased – as well as the number of library cards issued, the number of books checked out, and computer usage are also up. A second, similar facility has broken ground for the East Branch of the Milwaukee Public Library, which will be called The Standard.  The East Branch is, however, located in a more affluent neighborhood, and the apartments have market-based rents, but the developers noted that Villard Square was the inspiration for The Standard. 

There are facilities like Villard Square outside Wisconsin; the “GrandFamiles House” in Boston, for instance, opened in 1998. Boston Aging Concerns, Young and Old United, Inc. (BAC – YOU) along with the Women’s Institute for Housing and Economic Development wanted to address the issue of grandparents raising a generation removed.  The home provides affordable housing in addition to social and educational activities for both grandparents and grandkids.  

The LEGACY Act (Living Equitably, Grandparents Aiding Children and Youth) will continue to help these communities flourish across the United States as the demographic grows.  “The LEGACY Act will build on the Grandfamilies House model and help organizations across the country build similar housing developments. There are four key components to the legislation. First, it would create national demonstration projects under existing HUD programs specifically to develop housing for grandparents and their grandchildren.  Additionally, the Act would make it easier for grandfamilies to receive family unification assistance, and would allow access to fair housing funds for education and outreach efforts about the legal issues surrounding these families. Lastly, the Act will provide HUD personnel with specialized training in working with grandfamilies.”[10]


[1] Generations United, available at: http://www.gu.org/OURWORK/Grandfamilies.aspx

[2] Wells Fargo NEXT Awards for Opportunity Finance, available at: http://nextawards.org/stories/villard-square-grandfamily-apartments

[3] AARP About GrandFacts, available at: http://www.aarp.org/relationships/friends-family/grandfacts-sheets/

[4] AARP GrandFacts, available at: http://www.aarp.org/content/dam/aarp/relationships/friends-family/grandfacts/grandfacts-wisconsin.pdf

[5] Mind the Gap, Grandparents Raising Grandchildren, available at: http://www.bos.frb.org/commdev/c&b/2002/spring/gf.pdf

[6] New York State Office for the Aging, available at: http://www.aging.ny.gov/livableny/ResourceManual/Housing/III1m.pdf

[7] Villard Square GrandFamily, available at: http://m.villardsquare.com/amenities.aspx

[8] 2011 NCSHA Annual Awards for Program Excellence, available at: http://www.ncsha.org/system/files/Wisconsin_0.pdf

[9] Jewish Family Services to Provide Services for GrandFamily Project, available at: http://www.jfsmilw.org/news/press_releases/grand_families.htm

[10] Congressman Capuano Introduces the LEGACY Act to Provide Affordable Housing Opportunities for Grandparents Raising their Grandchildren, available at: http://www.house.gov/capuano/news/2002/pr032002.htm

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Community Development and Policy Studies (CDPS) Update

CDPS conducts a regular survey of Seventh District professionals involved in community development and related fields and this blog briefly summarizes comments from two questions in the latest survey.  The first question asked respondents about the supply and quality of the rental housing in their communities; the second question focused on the challenges and opportunities to sustained growth and revitalization in their communities.

1)       Chicago metro respondents reported a shortage of affordable, high quality rental housing in the region.  Additionally, there has been a shift in the type of rental housing since there are now a large number of single-family houses for rent.  This shift means the supply and quality of rental housing can vary greatly by neighborhood and even by block.  Contacts in Iowa noted that the supply of rental housing has been growing and will continue to grow owing to new construction underway and planned.  With the rental market making a strong comeback, landlords have more pricing power.  In Wisconsin one respondent pointed out that there are still many vacant homes in distressed neighborhoods that are not in condition to rent.

2)      Most contacts focused on the challenges that their communities faced including access to capital, especially for the low- and moderate-income populations.  Also, jobs came up in many responses but in varying ways including: the lack of entry level jobs, high rate of underemployed, the limited skill set of the unemployed and low wage growth for the working population.  Additionally, getting to and from a job is difficult with parts of the population that need public transit not able to access it easily; credit issues prevent others from financing automobiles.  However, one contact from Iowa highlighted that there are job opportunities in the state because the manufacturing industry is expanding.

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“Manufacturing Better Opportunity & A Stronger Economy”

By Steve Kuehl

This autumn, the Federal Reserve Bank of Chicago held two Economic Development Forums in Wisconsin that focused on workforce development.  The Chicago Fed partnered with the Wisconsin Regional Training Partnership (WRTP) and The Center on Wisconsin Strategy (COWS) to co-host these events.   Each forum featured a panel discussion on workforce development comprised of industry and policy leaders discussing practice, opportunities, and policies to build a stronger manufacturing sector.  Central to the discussion were programs that the WRTP has built over the past year that work with their partners from community, business and labor. This experience is relevant to strengthening the manufacturing sector, to building and broadening opportunity, and to developing public policies at the state and local level that help secure that connection.

Laura Dresser, COWS, outlined the economic isolation of the population residing in Milwaukee’s central city.  She cited data showing that in the 1970s, more than half of Black men in Milwaukee were employed in factories and Black/White inequality in wages was well-below the national average: the Black median wage was 94 percent of the White median in 1979.[1]  During the 1980s, Milwaukee’s central city experienced a severe loss of manufacturing jobs to suburban industrial parks, southern states, and offshoring.  Milwaukee’s Black men employed in manufacturing experienced the heaviest losses.  Today, just 14 percent of Black men in Milwaukee hold manufacturing jobs and the median Black worker earns 40 percent less per hour.[2]

Rhandi Berth, WRTP, described how joint labor/management leadership is at the core of their organization’s work.  Through their network, the WRTP is connected to some of the best quality (i.e., high-wage and benefits) jobs in the regional labor market.  They serve as an intermediary, connecting central city residents to the region’s manufacturers.

The WRTP takes an unusual approach to connect workers with jobs.  Rather than following the traditional workforce development model, where a potential employee gets trained and then, hopefully, finds a job,  WRTP contacts manufacturers seeking workers, discussing  skill sets required, and then reaches into its network to find Milwaukee central city residents to fill the open position.  Many times, the candidate requires training.  The organization works within its network to arrange the needed training, which may take the form of on-the-job training, apprenticeships, and/or classroom courses.

Unique to WRTP’s process is a one-to-one match between a job opening and a person in their system.  The WRTP’s process cuts the training time for new hires because the potential employee gets the right skills, at the right time, only when an employer has a need for a particular type of worker.  In 2011, the WRTP served 1,245 individuals.  They trained 676 individuals and placed 215 individuals in jobs – at an average wage of $18.47/hour.  In 2012, the WRTP served 1,725 individuals.  They trained 554 individuals and placed 324 individuals in jobs – at an average wage of $18.08/hour.  From January 1, 2013 through October 31, 2013 (preliminary data as of 12/5/2013), the WRTP served 1,553 individuals.  They trained 688 individuals and placed 226 individuals in jobs – at an average wage of $17.72/hour.

Phil Neuenfeldt, Wisconsin State AFL-CIO, observed that beginning in the early 1990s, organized labor and management began to set aside their traditional adversarial relationship and started working together with regard to job training.  For businesses, investing in worker training makes sense in order to take advantage of technological improvements in equipment and work force processes.  Further, businesses are interested in creating a pipeline of future well-trained workers and have identified “critical thinking” as the skill in highest demand.  For workers, the WRTP model is about advancement and adaptation, as the skills required by the type of available work continually changes.  This approach increases worker job security and concurrently minimizes the offshoring of jobs.  Neuenfeldt commented that the WRTP has ramped up its results over the years, but the present challenge is to scale up the WRTP’s impact to a statewide level.

James Morgan, Wisconsin Manufacturers and Commerce, identified the issues most important to its membership.[3]  First, he expressed concerns about both the abilities of those looking for work and their willingness to work.  He questioned the work ethic of today’s workforce, citing the lack of social, attendance and conflict resolution skills.  Second, employers do a disservice by not providing accurate data on the job market, current wages, and the skills that are in demand.  He stated that students were not aware that employees on the manufacturing shop floor were paid more than employees staffing the front office.  Third, technical skill opportunities are disappearing from high school despite a mismatch between student preparation and available careers, with only 30% of Wisconsin jobs requiring a bachelor’s degree or more.  Finally, Wisconsin manufacturers have done a poor job of involving their industry with the education community and communicating the benefits of pursuing a career in manufacturing.

Morgan recommended best practices to jump start local initiatives that showcase exemplary businesses to the education community; improving statewide awareness of manufacturing careers to overcome stereotypes and misperceptions about manufacturing; increasing public awareness by providing regular communications on new workforce development initiatives; and offering community assistance to local and regional business-education partnerships to address the shortage in workforce skills.

Aaron Olver, City of Madison, made two key points related to workforce development in Wisconsin.  First, there has been a relocation of manufacturing facilities from the central city to the outskirts in both Madison and Milwaukee.  Historically, manufacturing facilities located in the heart of central cities in multi-story buildings, close to their workforces.  Today’s manufacturing facilities are located on the periphery of cities in industrial parks with ready access to rail and highway connections.  Newer manufacturing facilities are also single-story by design, improving movement of materials and finished goods within, and in and out of the structure(s).  As a result, central city residents are more likely to live near an abandoned multi-story brick warehouse than their workplaces.  Olver’s second point was that 21st century manufacturing jobs require tech savvy workers.  Without access to the proper training, central city workers, in addition to being physically isolated from jobs, face a skills divide.

Robert Henken, Public Policy Forum, discussed the findings of recent research on Milwaukee’s workforce development system and made four observations.[4]  First, coordination among Milwaukee’s major workforce development players and programs has improved in recent years.  Newer groups like the Milwaukee Area Workforce Invest Board’s Coordinating Council and the Milwaukee Area Workforce Funding Alliance, for instance, coordinate activities and prioritize funding for workforce development efforts in the region.  Second, employment and training services in Milwaukee receive federal funding, which has been declining for many years. Consequently, local workforce development organizations must pursue new revenue sources and improve efficiency to maintain current service levels.  Third, sector-based strategies show considerable promise, but some sectors are more germane to Milwaukee’s unemployed population than others.  The health care sector enjoys stable growth and has a constant need for entry-level positions that require standardized training.  However the manufacturing sector experiences demand cycles for workers, and often requires workers with specific skills and training.  Consequently, workforce development organizations must balance the costs of meeting specified training needs with the desire to operate at scale and move more people toward employment.  Finally, Milwaukee must coordinate economic development priorities with policy and funding that facilitates (through training and workforce development groups) the needed skill sets among unemployed workers.  Ultimately, Milwaukee’s advanced manufacturing sectors may not provide a significant number of jobs for chronically unemployed individuals due to the level of education and training needed to qualify for many high-skill positions.

The Economic Development Forums’ presentations and discussion pointed to broad agreement that the intermediary model created by the WRTP, which heavily leverages public and private resources, bridges the regional disconnect between the workforce, community, resources and industry.  Further, the WRTP is able to reach consistently to all jobs within a firm – from entry-level to those requiring more advanced training.  Challenges remain with regard to scaling up the WRTP’s impact to a statewide level and to matching jobs for chronically unemployed individuals who lack the required skills.

 COWS

Manufacturing Better Opportunity & A Stronger Economy provides key data on manufacturing in Milwaukee and the problems which the central city community confronts. Additionally, it discusses the work of the Wisconsin Regional Training Partnership  to build a stronger bridge from community to manufacturers throughout the region.


[2] Ibid.

[3] Morgan, Jim. March 15, 2012. Presentation provided to the Workforce Paradox Conference.  Available on the internet at http://www.wmc.org/cms/wp-content/uploads/2011/12/Jim_Morgan_web1.pdf

[4] Peterangelo, Joe, Henken, Rob, and Helpap, David. December 2012.  Exploring the Activities and Resources of Milwaukee’s Workforce Development System.  Public Policy Forum.  Available on the internet at: http://publicpolicyforum.org/sites/default/files/PathwaystoEmployment.pdf

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Redefining Rust Belt: The Local Impact of Anchor Institutions in Detroit, Baltimore, Cleveland and Philadelphia

By Robin Newberger and Maude Toussaint-Comeau

The Federal Reserve Banks of Richmond, Cleveland, Philadelphia, and Chicago-Detroit Branch recently held a discussion on the roles of anchor institutions and cultural and art organizations in the revitalization of urban neighborhoods, the second exchange in a series between the four cities on strategies to attract new residents and investments.

Anchor institutions play an active role in contributing to the economies of cities like Detroit, Baltimore, Cleveland and Philadelphia. Universities, hospitals (“eds and meds” in economic development vernacular), and other large-scale employers, once they are established, often stay rooted in their locations, and thus provide a base for the economic activity in their communities.  The impact of these institutions is often felt across their entire cities or metropolitan areas as well, as they employ large numbers of both low-skilled and high-skilled workers, and attract and retain employees, students, patients, and visitors. Data available at the county level show that employment has increased in the education and health sectors even as overall employment has declined in recent years for all four cities. As of 2012, these two sectors together accounted for more than 35 percent of total employment in Philadelphia County, and for 20 percent of employment in Wayne County (where Detroit is located). In Baltimore and Cuyahoga (Cleveland) Counties, the share of employment for those two sectors was close to 25 percent. (See charts). In Detroit alone, some experts estimate that educational and medical institutions hire 3,000 new employees every year, and add $1.7 billion of goods and services to the local economy.[1]  

In the city of Detroit, some of the anchor institutions include Wayne State University, Henry Ford Hospitals, Detroit Medical Center, the College of Creative Studies, and several museums. Arts institutions are increasingly viewed as having the potential to play an anchor role as well. While the employment base of this industry is relatively small, creative outlets add a quality of life dimension, tend to bring people of different walks of life together, and contribute to community diversity and stability.

Anchor 1

Anchor 2

Anchor 3

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Rethinking the Concept of Anchor Institutions and Measuring their Impact

Even so, the scope (and scale) of revitalization needs in these cities would be difficult to overstate, and it is unclear just how far place-based institutions’ economic development strategies can take those cities. How successful are in fact these institutions? While many anchors have a nonprofit status, and enlightened self-interest motivates many to care about the vitality of their neighborhoods, to what extent are they optimizing their efforts to affect local residents and contribute to community revitalization?

These were some of the questions raised in the videoconference discussion between experts in each of the four cities, who came together on October 25, 2013 to share strategies and recommendations for attracting investments and growing their cities in ways that provide opportunities for all residents. The initiative was part of a collaborative titled “Redefining Rustbelt,” which seeks to bring together community development practitioners and policymakers to focus on increasing investments, attracting residents, and creating benefits for the people living in these cities, all of which have declining populations.

The conversation uncovered the importance of rethinking the role of anchor institutions in a community, and it offered ideas on some specific instances in which they can effectively contribute to community revitalization. A main takeaway was the importance of effective collaboration and partnerships with the community, a sometimes elusive goal. Ultimately, incentives must be aligned between the anchor institution, neighborhood residents, businesses, and other local advocates in order to ensure large-scale investment that benefits residents and businesses in the adjacent community.

Ted Howard of the Democracy Collaborative framed the discussion with an overview of their work on evaluating the contribution of anchor institutions to surrounding neighborhoods. As he explained, these institutions fulfill their missions when they harmonize their intellectual resources with their prodigious economic power by hiring, investing, and spending to benefit and increase the welfare of surrounding communities. To help institutions assess whether their initiatives actually improve the lives of neighborhood residents, the Democracy Collaborative created the Anchor Dashboard that measures anchors’ quantifiable contributions to economic development, health and safety, the environment, community building and education, among other metrics.

The ensuing discussion gave an opportunity for participants in each city to share their own perspectives on the most compelling aspects of the anchor concept. Noting the distinction between residential neighborhoods and the economic center of a city, several participants offered up the idea that churches, quality schools, grocery stores, and even charismatic leaders often function as anchors of sorts in their neighborhoods. While participants acknowledged the benefit of large-scale hiring by anchors to residents of the community, they also focused on other types of investments that can support the competitiveness of neighborhoods, such as investing in crime reduction strategies, pre-school and afterschool activities, and affordable quality housing programs.

The discussion also highlighted some specific examples of successful investments by anchor institutions that have been useful for community revitalization in each of the cities. In Detroit, for example, these have included residential incentives to increase household density in the Midtown neighborhood. In Baltimore, they have included the development of new housing for residents around the Johns Hopkins campus. In Cleveland, fundraising by three nonprofit arts organizations, along with contributions from the city and state, created the Gordon Square Arts and Entertainment District, generating spin-off businesses and attracting investment for new units of market-rate housing. In Philadelphia, arts and culture organizations have connected to the social needs of neighborhood residents through the Restorative Justice Guild program of Mural Arts, sponsoring mural-creation programs that engage ex-offenders.

Anchors and Community Partnerships, Moving Forward

While participants noted that many anchors have been successful in stepping out of their traditional footprints, setting up outposts in economically-challenged neighborhoods, others suggested that the “anchor strategy” should perhaps be something other than deploying similar programs in various geographies. Rather, it requires community developers to find out who and what are the local agents of change, how to support them, and how to cultivate leadership around them. As some participants noted, successful anchor strategies result from neighborhood actors being motivated to create a community impact, making it difficult for proven projects to be replicated from one neighborhood to the next.

Participants also tended to agree that partnerships are a prerequisite for successful anchor strategies, either between the anchor organization and the public sector, or the anchor organization and other private sector entities. Many participants spoke of the importance of educating elected officials to understand the anchor mission, for the purpose of both convening citizens and anchor institutions, but also for marshaling public resources. In some of the cities, local governments have provided infrastructure improvements, coordinated land planning, acquisition, disposition, and historical preservation processes, and even made direct investments in anchor initiatives. In other cities where the public sector has had fewer resources at its disposal, participants emphasized the role of anchor partnerships with other private sector organizations to provide services related to safety, beautification, and transportation in the surrounding neighborhood. They also noted the opportunity for federal programs to augment the impact of anchor institutions, although many have found it a struggle to make their initiatives conform to all federal guidelines.

Encouraging an anchor institution to collaborate within external entities is often itself a difficult task. Within an anchor institution, the most effective community development leaders tend to be those who have a high level of expertise, have credibility with neighborhood organizations and other external actors, and who have access to the president of the institution. As a participant reminded, indeed the most important explanation for what brings an anchor institution to invest in the surrounding community has to do with its own incentives. Some of the most successful housing and business development projects have come about because of the alignment in incentives between the anchor and the community.


[1]Based on research by U3 Ventures consulting and development firm. See http://urbanland.uli.org/planning-design/anchor-institutions-driving-redevelopment-of-detroit-other-cities/

 

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Community Colleges and Industry: How Partnerships Address the Skills Gap

By Emily Engel

Community Development departments across the Federal Reserve System have for many years focused on workforce development measures as a means to address poverty. Low- and moderate-income (LMI) populations tend to have less education than higher income populations.  Less education correlates with jobs that pay less and offer less employment security. Public high schools around the country, facing budget shortfalls, have cut vocational training programs thereby further diminishing employment prospects for young adults who do not plan to attend college. In 2011, Community Development and Policy Studies (CDPS), a division of the Chicago Fed, launched its Industrial Cities Initiative (ICI) to take a close look at ten former industrial/manufacturing hubs and their economic evolution over the last 50 years. The ICI has paid particular attention to the labor force in these cities and the steps taken by community colleges to meet demand for vocational and technical training by major employers nearby.

In conjunction with the ICI, CDPS has collected information that suggests a skills/education shortage may play a significant role in employment rates across the Seventh District, a role that the recession likely intensified but did not cause. Evidence predating the recession shows that firms noted shortages of skilled labor prior to the recession. For a more detailed discussion of labor market participation rates by educational attainment, see the August 2011 Chicago Fed Letter 

A recent survey of Seventh District community development leaders revealed a general consensus that inadequate education and job training represent serious obstacles to employment. Some respondents also noted a geographical skill shortage in rural areas, stating that workers lack essential skills for complex jobs in certain fields. Most respondents noted that the generalized skills mismatch cuts across populations of LMI workers, non-college educated workers, older workers, and the long term unemployed. Respondents also observed that few/poor child care and public transit options represent obstacles to participation in training classes.

The ICI research revealed that cities of all sizes have relatively current information about their workforce development needs and employ cooperative strategies with local colleges to address these demands. Community colleges and technical colleges are an important part of skills training at the local level. Leaders throughout the Midwest emphasize that these programs are flexible, responsive to business needs, and provide structured training and certification programs designed to address skills gaps. They also help build partnerships between governments, businesses, and local colleges.

Research shows that the vast majority of the nation’s workers do not hold undergraduate degrees, and non-degreed workers with outdated skills are currently experiencing higher rates of joblessness. Data from the National Center for Education Statistics for 2011 (most recent available) indicate that 28 percent of the nation’s population 25 years of age and older hold at least a bachelor’s degree. Further, the data shows a 64 percent increase from 2002 to 2012 among sub-baccalaureate workers earning certification or licensure at a community or four-year college. U.S. Census data, which employs somewhat different measures and thresholds, indicate the percentage of the population with at least a high school degree has been increasing since 1970, as has the percentage of the population with post high school education (if not a four-year degree). The percentage of people with some college or a college diploma increased 160 percent during this time. While these trends are encouraging, demands in the labor market for highly skilled workers reinforce the value of investing in skills training. Community colleges are working, often with active participation and input from major employers, to train workers in the skills they need.

With all that information at hand, CDPS decided to look in depth at what some of the community colleges around the 7th District are doing to try and close the skills gap. For a more in depth analysis, please read the full article.

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Summit on Regional Competiveness

By Emily Engel and Susan Longworth

On Friday September 27, 2013, The Federal Reserve Bank of Chicago hosted the Summit on Regional Competiveness (Summit) with The Alliance for Regional Development (Alliance) and the Chicagoland Chamber of Commerce.  The Alliance is an economic development group working to implement recommendations contained in a 21-county, tri-state (Illinois, Indiana, and Wisconsin) analysis completed by the Organization for Economic Co-operation and Development (OECD).

According to the OEDC report, cooperative and regionally oriented economic development offers opportunity for sustainable growth in key industries within the Chicago MSA. Please read our blog from last year to learn more about how ‘Federal Agencies Align to Support Regional Growth.’

The goal of the Summit was to demonstrate that the tri-state region can cooperate to find solutions to the challenges in the OECD report. The agenda included welcome remarks from Daniel Sullivan, Director of Research and Executive Vice President, Federal Reserve Bank of Chicago, and a keynote address from Austan Goolsbee, the Robert P. Gwinn Professor of Economics, University of Chicago’s Booth School of Business. The emcee for the event was Theresa E. Mintle, President and Chief Executive Officer, Chicagoland Chamber of Commerce. Governors Scott Walker of Wisconsin; Governor Pat Quinn of Illinois; and Governor Mike Pence of Indiana all attended the Summit.

The Summit addressed the following topics:

  • Matching Skills to Jobs in the Tri-State Region—to explore potential regional approaches and programs that satisfy business needs while closing the skills gap;
  • Innovation in the Tri-State Region—to explore how best to enhance the region’s performance in innovation-driven business clusters;
  • Transportation and Logistics in the Tri-State Region—to explore how connectivity including, air, road, port, and rail transportation can help grow the region’s future as a mega-logistics hub; and
  • Increasing the Region’s Competitiveness through Green Growth—to explore environmental factors impacting economic growth and development.

Takeaways from the Summit included the following points. Panelists highlighted the need to brand the region in a manner that capitalized on regional assets like the Great Lakes and a central location. Concerns were raised about balancing municipal needs with regional ambitions. As municipalities struggle to retain and raise revenue and jobs, there is unresolved tension between collaboration and competition that is most acutely felt by local officials. The region’s significant transportation assets were mentioned frequently, along with the need to address growing congestion and manage natural resources, such as the Great Lakes and other inland waterways responsibly. Workforce development was discussed at length and strategies for engaging and training new workers were emphasized. Panelists recognized the increasingly technical nature of today’s jobs and the challenges faced by those seeking higher education.

For the full agenda, please see the Federal Reserve Bank of Chicago’s website.

For more background information, please read the Chicago Tri-State Metropolitan Area OECD report.

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CABE event highlights measures of regional economic performance

By: Ryan Patton

On September 26, 2013, the Chicago Association for Business Economics (CABE) hosted a lunch meeting with Steve Landefeld, Director of the US Bureau of Economic Analysis (BEA), at the Federal Reserve Bank of Chicago.  In his presentation “Lessons Learned from the Financial Crisis and the Great Recession”, Landefeld discussed the BEA’s initiative to produce measures beyond gross domestic product (GDP) that better capture the distribution of growth and monitor the sustainability of economic trends.

Of particular interest to readers of this blog, the BEA recently released a series that measures purchasing power across states and metropolitan areas.  Adjusting for differences in regional prices allows a more direct comparison of real personal income.  Landefeld presented the following figure of personal income growth across states in the seventh district, adjusted for inflation and regional prices.

Figure 1

CABE1

Source: BEA*

Iowa stands out for its relative strength on this measure, which is also evident among our sample of cities for the Industrial Cities Initiative (ICI).  ICI is an effort by CDPS to better understand trends shaping industrial cities in the Midwest.  We are currently producing in-depth profiles of 10 former manufacturing hubs: Cedar Rapids, IA; Waterloo, IA; Aurora, IL; Joliet, IL; Fort Wayne, IN; Gary, IN; Grand Rapids, MI; Pontiac, MI; Green Bay, WI; and Racine, WI.  An analysis of 2011 income data for the metropolitan statistical areas (MSAs) associated with our sample cities reveals that, after adjusting for purchasing power, per capita personal income becomes greater in Cedar Rapids than Chicago, which ties with Waterloo for second place.  (Note that the Chicago MSA includes Aurora, Joliet, and Gary.)  The large adjustment is due to the fact that the price level in Cedar Rapids and Waterloo was only 90% of the overall national price level in 2011, whereas Chicago’s was 106%.   A clearer understanding of such variation in purchasing power should improve policymakers’ interpretation of economic impacts across regions.

Figure 2

CABE2

Source: BEA**

Landefeld also touched on cuts the BEA has made due to sequestration, which include a reduction in its detailed local area personal income statistics and the elimination of its regional input-output modeling system.

Watch for future CABE events as well as CDPS profiles from the Industrial Cities Initiative, which will shed more light on trends in Cedar Rapids, Waterloo, and the other industrial cities.

For more information on the event, please see Steve Landefeld’s presentation and Bill Testa’s Midwest Economy Blog.

Additional information can be found at the following resources:

*Note: Data adjusted for inflation with the BEA’s national Personal Consumption Expenditures (PCE) chained price index (2005=100) and regional price parities (RPP) by state. A chained price index accounts for the fact that consumers change their basket of goods as relative prices move up or down, rather than maintain a fixed basket of goods.

**Note: Data adjusted for inflation with the BEA’s national Personal Consumption Expenditures (PCE) chained price index (2005=100) and regional price parities (RPP) by MSA.

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