At the TrustBelt 2016 conference in Chicago, a panel of business and economic development leaders discussed how innovation and new technology in the Midwest has been key to economic recovery in the area after the recession. The discussion, led by the managing director of Moody’s Analytics, Sophia Koropeckyj, looked at where in the Midwest industries have been most successful, and why.
The panel was moderated by Ali Velshi, a global affairs and economic analyst best known for his former role as CNN’s chief business correspondent, and included Lindsay Friedman, director of operations at Lokal Links, Ankur Gopal, CEO of Interapt, Craig Hagen, global head of government affairs at Electronic Arts.
Koropeckyj offered statistics on wages and economic growth across the Midwest. The region she said, has seen greater recovery, in terms of economic growth, than the national average. Here are the cities that have performed better, in terms of % change employment from pre-recession peak, than the US average:
- Des Moines, IA
- Columbus, OH
- Grand Rapids, MI
- Ann arbor, MI
- Indianapolis, IN
- Madison, WN
- Minneapolis, MN
- Omaha, NB
Why are these cities the winners? Koropeckyj pointed to several factors. The Midwest offers low business costs—including wages, energy, and office space—that are attractive to businesses. Koropeckyj also pointed to tech as a primary factor. Many of the areas are tech incubators, with IT-producing industries. The Midwest also has a concentration in finance. And, finally, some of the key areas that have been successful (Illinois, Indiana, Ohio, and Minnesota) have had strong medical industries.
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The panel also discussed several issues surrounding economic development strategies: Specifically, workplace availability and quality. So, how do you attract talent? Economic incentives? Governmental policies?
“If you have a robust economy, you can pull people in,” said Koropeckyj. Here were some other takeaways:
“When we think of tech hubs,” said Gopal, “one of the associations is that they’re created because they’re fun places to be. But, what’s the chicken and what’s the egg?”
Gopal said that people often refer to the “Silicon Valley of the Midwest”—but it’s not that simple. “Creating a tech hub is not about having a cool space with a ping pong table,” he said. “It’s about having a skilled workforce, livability, infrastructure, and accommodating policies.”
Koropeckyj pointed to the issue of an aging of workforce, with baby boomers leaving. “We are facing a much tighter labor market,” she said. She also said she believes immigration reform is key to filling jobs in the Midwest.
“It is absolutely necessary for the US to come to some policy,” she said. “Canada has come up with creative ways to attract workers. If states sponsor the visas, people with requisite skills could replenish or fill out the workforce and be tied to that state.
Gopal’s company, Interapt, is based in Louisville, KY. He argued that “economic development needs a strategy to not just attract existing companies, but to create new ones from local champions. Localization is the future, not relocation,” Gopal said.
“It’s not just about bringing people in, competing on battleground,” he said. “It’s about nurturing and getting ready for the information revolution. I believe Kentucky coding will power the information revolution.”
“All the areas doing well have very strong universities that are constantly feeding the area,” Koropeckyj said. “And companies must be much more willing to train workers.”
“Education reform also means K-12,” Hagen said “The only way we begin educating the workforce is to start early. The fact that we’re still educating kids today the same way I was taught is really the biggest challenge.”
Governmental policy versus incentives
“I’m not keen on targeting incentives,” said Koropeckyj. “A company may create jobs but not have a commitment to the area. So, the way to get a healthy economy is by having a strong underlying infrastructure.”
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Hagen agreed about the importance of policy. “When an auto plant wants to relocate, a state will throw money at it, give it a tax abatement. But in the long term, will that help the state economy perform well?”
He gave an example of how his company had an explosion of growth in Orlando. But the workforce, whose average age was 32, wasn’t interested in commuting for 45 minutes a day. “That became an issue,” said Hagen, “and we had to look at creative ways to make up for it.
“It’s the public policy issues that give the greatest benefit,” he said. “I urge economic development specialists to be the spokespeople for the kinds of policy issues like education reform. When you begin looking forward to where job growth will occur, you have to become spokespeople.”