Category Archives: Economy

Best-Performing Cities 2013

Source: Ross C. DeVol, Minoli Ratnatunga, and Armen Bedroussian, Milken Institute, December 2013

What critical factors determine which U.S. metros are thriving or merely surviving? Which places possess the traits that will lead to success? Our annual Best-Performing Cities report provides a fact-based, comprehensive metric system across metropolitan areas that highlights the job, wage, and technology trends that shape current and future prospects.

Technology and energy were the forces powering this year’s top performers, even more so than in 2012. Of course, tech firms didn’t just fall from the sky; the leading tech metros cultivated these assets through indigenous innovation and strategic recruitment. Some were successful despite being high-cost, high- regulation locations. For example, San Francisco-San Mateo-Redwood City, CA; San Jose-Sunnyvale- Santa Clara, CA; and Cambridge-Newton-Framingham, MA, have developed critical masses of R&D assets and infrastructure that make it easier to innovate in those metros than in many lower-cost locations. The friction costs of innovation are minimized. Other tech centers are capturing more of their locally generated innovation and filling in the missing ingredients as needed. Austin-Round Rock-San Marcos, TX, Raleigh-Cary, NC, and Denver-Aurora-Broomfield, CO, fall into this category. …

…Among this year’s key findings:
» Austin-Round Rock-San Marcos, TX, reclaimed the top spot as our 2013 Best-Performing Large City. Austin’s technology base is highly diversified and has been performing admirably.
» The Lone Star State, which has both technology and energy assets, claimed three of the Top 10 and seven of the Top 25 large cities.
» Colorado and California are each home to four of the Top 25 large cities.
» Technology hubs dominated with 13 of them in the Top 25, and technology growth helped propel several other metros into the top ranks.
» The shale oil and gas boom thrust nine other metros into the Top 25.
» Columbia, MO, was the Best-Performing Small City with the help of high-tech industries like telecommunications, which saw employment grow by 60 percent from 2007 to 2012.
» Hagerstown-Martinsburg, MD-WV, recorded the biggest gain among the large cities, vaulting 100 spots. …

County Tracker 2013: On the Path to Recovery

Source: Emilia Istrate and Nick Lyell, National Association of Counties, NACo Trends Analysis Paper Series, Issue 1, January 2014

From the press release:
An analysis of annual changes of four economic performance indicators— economic output (GDP), employment, unemployment rates and home prices—between 2012 and 2013 across the 3,069 county economies reveals that:
– Growth continued in 2013, but the recovery is still fragile in some parts of the country. …
– ​​Large county economies were at the core of the recession and the recovery. …
– Employment in medium-sized county economies was more stable during the recession, but had a mixed record in 2013. …
– By 2013, the recovery in small county economies covered the entire scale of potential outcomes. …

Advancing Economic Opportunities for Business Owners and Job Seekers with Disabilities: A Review of State and Municipal Government Contracting Procurement and Tax Incentive Programs for Disability-owned Businesses

Source: Kathy Krepcio and Jui Agrawal, Rutgers, John J. Heldrich Center for Workforce Development, October 2013

A number of states are using existing policy tools and programs that incentivize the private business community to bolster the employment of people with disabilities, and to encourage opportunities for small business owners and entrepreneurs with disabilities. This report, by Kathy Krepcio and Jui Agrawal, provides an overview of government’s use of these tools to advance socioeconomic goals for disadvantaged populations, including people with disabilities, and to provide broader access to employment opportunities through financial and other assistance to private businesses. It identifies and highlights states and large municipalities that have established and/or expanded existing programs to target and include disability-owned businesses or encourage the hiring of workers with disabilities in the private sector, and provides an overview of their characteristics and features. Finally, this report offers recommendations for encouraging the expansion of these efforts on a broader scale.

How Millennials Have Already Reshaped Politics

Source: Ronald Brownstein, National Journal, January 9, 2014
(subscription required)

Political parties are taking young people’s policy preferences into account, but that doesn’t mean they’re getting everything they want. … Almost every week provides more evidence of the political system bending toward the cultural preferences of the massive millennial generation. But evidence is accumulating just as quickly of the system’s failure to respond to its economic needs. …

Tax Rates and Economic Growth

Source: Jane G. Gravelle, Donald J. Marples, Congressional Research Service, CRS Report, R42111, January 2, 2014

This report summarizes the evidence on the relationship between tax rates and economic growth, referring in a number of cases to other CRS reports providing more substance and detail. Potentially negative effects of tax rates on economic growth have been an issue in the debates about whether to increase taxes to reduce the deficit and whether to reform taxes by broadening the base to lowering tax rates.

Initially, it is important to make a distinction between the effects of policies aimed at short-term stimulation of an underemployed economy and long-run growth. In the short run, both spending increases and tax cuts are projected to increase employment and output in an underemployed economy. These effects operate through the demand side of the economy. In general, the largest effects are from direct government spending and transfers to lower-income individuals, whereas the smallest effects are from cutting taxes of high-income individuals or businesses…

The Case for Expanding Head Start as a Wise Investment in America’s Future

Source: Alison Mitchell, Scholars Strategy Network, Basic Facts, August 2013

…Unfortunately for the young children involved – and for all of us – chopping Head Start is close to the worst possible step our nation could take. A large body of research demonstrates that early childhood education reduces social inequality and boosts economic growth. If representatives in Congress really want to strengthen the economy, they should be expanding and not shrinking Head Start and other equally effective education programs for young children….

Do Cuts In State Income Taxes Boost Economic Growth?

Source: Dan Rickman, Oklahoma State University, Scholars Strategy Network, Key Findings, September 2013

As the United States struggles to recover from the recession of 2007-2009, loud voices are calling for cuts in state and local taxes to spur economic growth. In particular, advocates argue that cuts in personal income taxes will promote growth and development. But what is the evidence for this idea? Objective scholarly research on the economic effects of state and local expenditures and taxes is often neglected or misrepresented by tax cut proponents.

Evidence from my own studies and those of many others suggest s that adjustments in state and local taxes and spending can, at most, spark marginal gains in economic performance. Across the United States in recent decades, states and localities have adopted more similar tax and s pending policies, leaving less room for improvement. Crucially, there is no evidence that tax cuts pay for themselves by boosting future growth and tax collections. For public officials, there is no escape from carefully considering how various balances of taxes and spending affect both government budgets and surrounding economies. The truth is that certain kinds of tax reductions may have little effect on economic growth – even as they drain government coffers of revenues needed for crucial economic and social goals…
See also:
Sharing the gains of local economic growth: race-to-the-top versus race-to-the-bottom economic development
Source: Stephan J. Goetz, Mark D. Partridge, Dan S. Rickman, Shibalee Majumdar, Vol. 29 no. 3, 2011

In attempting to promote economic development, states often pursue either a race-to-the-bottom approach focused on lowering business costs or a more investment-based, race-to-the-top approach that aims to increase productivity, innovation, and entrepreneurship. Whether either approach promotes growth and produces broad-based economic gains across the population is the subject of this paper. The novelty of our approach is that an extensive array of variables representing examples of the two economic development approaches are examined for their effects on various indicators of state economic performance, including income distribution, over the 2000 – 07 period. We find that lower taxes are statistically insignificant in explaining state economic performance, and that targeted tax incentives and financial assistance—as currently practised—are more likely to harm growth and income inequality. Some support exists for state and local governments to encourage entrepreneurship and to enhance Internet connectivity.
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Five Economic Reforms Millennials Should Be Fighting For: Guaranteed jobs, universal basic incomes, public finance and more

Source: Jesse A. Myerson, Rolling Stone, January 3, 2014

It’s a new year, but one thing hasn’t changed: The economy still blows. Five years after Wall Street crashed, America’s banker-gamblers have only gotten richer, while huge swaths of the country are still drowning in personal debt, tens of millions of Americans remain unemployed – and the new jobs being created are largely low-wage, sub-contracted, part-time grunt work.

Millennials have been especially hard-hit by the downturn, which is probably why so many people in this generation (like myself) regard capitalism with a level of suspicion that would have been unthinkable a decade ago. But that egalitarian impulse isn’t often accompanied by concrete proposals about how to get out of this catastrophe. Here are a few things we might want to start fighting for, pronto, if we want to grow old in a just, fair society, rather than the economic hellhole our parents have handed us.

1. Guaranteed Work for Everybody…
2. Social Security for All…
3. Take Back The Land…
4. Make Everything Owned by Everybody…
5. A Public Bank in Every State…

Impact of the Great Recession on Retirement Trends in Industrialized Countries

Source: Gary Burtless and Barry P. Bosworth, Brookings Institution, November 5, 2013

From the abstract:
The Great Recession had a large impact on unemployment rates and growth in wealthy industrial countries. When the recession began most rich countries were experiencing an increase in labor force participation rates after age 60. This paper examines whether the downturn slowed or reversed the trend toward higher old-age participation rates. We use straightforward time series analysis to test for a break in labor force trends after 2007. Our results indicate that the average rate of increase in labor force participation slowed in only a handful of countries. Averaging across all 20 countries in our sample, we find that the average pace of labor force participation increase was faster after 2007 than before. Countries that experienced unusually severe downturns represent exceptions to this generalization. In most countries, however, the trend toward later retirement not only continued, it accelerated.

Econometric Estimates Of The Effects Of NAFTA: A Review Of The Literature

Source: Justino De La Cruz, David Riker, Bennet Voorhees, United States International Trade commission (USITC), Office of Economics Working Paper No. 2013-12A, December 2013

This paper reviews a series of econometric studies of the impact of the North American Free Trade Agreement on the economies of Mexico, Canada, and the United States. It highlights eleven papers from the last decade that vary in the economic outcomes analyzed (trade flows, wages, employment, productivity, investment, and income in one or more of the countries) and in the statistical methodologies and types of data that are utilized.