There are many economic developers that will soon lose their jobs because the impact of COVID-19 is causing a reduction in real estate, business, and sales taxes that fund economic development organizations. Economic development funding is a lagging indicator. This is an opportunity because economic developers still have time if, and only if, you start making changes now to keep your job in 2021, when the funding crisis for economic development really hits.
When the cuts come, only the most valuable economic developers will survive and be kept on payroll. If you aren’t an essential economic developer, then your boss, their boss, and the people who make the budgets are cutting your job first.
You might think this won’t happen to you, but just look at the economic developers in privately funded economic development organizations (EDOs) that were the first to feel the economic impact of COVID-19 with cuts and job terminations.
If you want to be essential, you need to be indispensable for what comes next in economic development. To know what that is, you need to know what is declining and elevating in the profession of economic development so you can be part of the future and not the past. This will enable you to reposition yourself if you are an employee of an EDO to keep your job or reposition your organization if you are the director of an EDO that wants to keep your funding.
ECONOMIC DEVELOPMENT WORK DECLINING IN VALUE
If you are an economic developer in any of the following areas of work, you are more at risk because of the turbulent nature of these types of initiatives.
Did you spend more or much less money on vacations in 2020 than 2019? Did you take a plane to anywhere to take a vacation since March of 2020? How secure do you think people will feel taking long-distance vacations until a vaccine for COVID-19 is developed and widely implemented around the world? How comfortable are you at trusting that the cleaner at the hotel you are considering staying at is actually going to thoroughly clean away the germs of the last vacationer that may have been infected before you put your head down on the same pillow? Exactly.
Tourism has experienced a steep decline and is one of the worst damaged industries. The decline in tourism is a macro trend. Even if your efforts are successful at making things less bad, they may still be measured as failure.
Who is going to make a multi-million-dollar decision on a new business location without ever physically visiting it and during highly uncertain economic times caused by the worst economic calamity of all of our lives? Few business are doing this. Also, if it was difficult for your community to compete to get these businesses last year when we were under the longest and most robust economic expansion of our lifetimes, you better get prepared for the new reality that you will have to compete at an elite level to win the few crumbs available.
While Business Retention and Expansion economic developers can claim every business that stays open as a win, business recruitment economic developers are going to show numbers that will expose their inability to recruit businesses in today’s economic reality. It may not be your fault, but if your business attraction numbers look bad – and they will – your job will attract attention as a job cost that has a poorer return on investment and may be eliminated.
Foreign Direct Investment
How many foreign-owned businesses have visited your community for a potential expansion since March of 2020? How many visits do you have scheduled for Q1 2021? Exactly. US and European FDI investments have plummeted. So, you either need to convince whoever you are working for and who is funding your salary that you are worth keeping on payroll even though you likely produced poor results in 2020 and are likely to produce dismal results for more time to come, or you are going to need to figure out or how to start doing something in economic development that is going to have an impact now. If you work in FDI and are looking for a related type of work to which you can transition, keep reading further to the topic of reshoring.
Trade Missions and Trade Shows
Almost all of Europe won’t even let US passport holders into the continent at the moment. Self-preservation makes people want to avoid people from countries with high infection rates and the USA has one of the highest. If you are able to go to a country for a trade mission, will you have to wait for 2 weeks in a quarantine hotel before you are able to meet with someone?
Trade shows have been postponed and then have become either cancelled or virtual trade shows. Are you excited about scheduling time to visit with someone in their virtual booth? How excited do you think a business is going to be to visit your virtual booth during a conference? Or would they rather use that time to check and respond to their email? There are about to be some economic developers who are going to spend serious money hoping people will visit their virtual trade show booth. But if they spend meaningful budget on these virtual conferences, they are either going to have to prove success or they have just shown their boss that the work they are doing no longer is needed.
ECONOMIC DEVELOPMENT WORK INCREASING IN PROFESSIONAL IMPORTANCE
If you are an economic developer who wants to maximize the likelihood you keep your job, working in these areas or changing over this type of work increases your relevance and value.
Reshoring is the new business attraction and foreign direct investment rolled into one. The idea of bringing manufacturing production, suppliers, and jobs back from other countries is music to the ears of your local businesses and elected officials no matter where they sit on the political spectrum. There is no one who is going to be against creating local supply chains that make your local businesses more resilient. However, to do this requires a very different process than traditional business attraction and FDI. You’ll have to go out and meet with your local businesses/industries to understand their supply chains or you won’t know what to re-shore.
Small Business Retention and Expansion
Every elected official must say they support small businesses if they want to get elected (you saw it happen in this last election) and now every economic developer is going to have to show they support small businesses if they want to be relevant. Small businesses have been beaten down by COVID-19 and they need economic developers’ help to survive. Like politics, all economic development is local, and nothing is more economically local than small businesses. Small businesses employ about half of all the employees in your community and create approximately half of the economic impact too. If only half of your economy survives, all of your economy’s death may follow.
Moreover, unlike the CEOs of big corporations, the small business owners live and vote in your community. If your economic development department is going to experience budget cuts, who is going to come to your defense to make sure you don’t lose your funding? Here are some of your options:
- The business that isn’t in your community you’ve been trying to recruit,
- The CEO who lives in New York City that has a satellite business in your city, or
- The small business owner who relies on local economic development for their business to survive and who has kids that go to the same school as your kids?
Furthermore, if you are an economic developer in an organization, who are the local businesses (who talk to your funders/elected officials) going to want to keep, the economic developers that support them or those that are focused on businesses outside of the community?
What is going to replace all of the companies in your community that COVID-19 killed? New businesses. Will new businesses happen? The data shows it’s already happening. In the 2008-2009 recession new business starts were anemic. Today, new businesses are exploding in growth. But you need to make sure that your community can enable it, so you get at least your fair share of the new business development and you are the economic developer who can legitimately take credit for enabling this growth. In the 1980s economic developers’ motto was, “shoot everything that flies and claim everything that falls.” In 2021 the clearest way to ride the wave of success is entrepreneurship.
Nothing has accelerated the digitization of economic development organizations faster that COVID-19. While the trend was already happening, this pandemic exposed that only digital EDOs were ready for the current and future challenge. While the organizations that were already digital-ready had an advantage, the EDOs that responded quickly by adding online software services, digital infrastructure, and technologically advanced communication were able to evolve to meet the challenge. However, this digital divide is going to create a separation between the EDOs that experience success and failure. The economic developers that are digital-ready, implementing new online services, and who can lead a digital transformation of their organizations will be so essential there is no way the organization can live without them.
New location infrastructure
For the many people who are now untethered from the physical constraints of working in a physical office, uninformed economic developers think workers can live and work anywhere. But that’s not true. While it is true that people can live and work many more places than before, their new location requirements are going to create both the new economic powerhouse locations and those areas that are left behind.
The new economic currency of location includes quality of place (this is unique for what individual people like; some like beaches, mountains, etc.), high speed internet (if you don’t have this people can’t work remotely), quality health care (you might be able to work anywhere but if something happens to you and the nearest hospital is miles away or the quality of the doctors in some remote country are sub-standard, you aren’t going to choose that place), suitable schools for your kids, and access to transportation (COVID-19 isn’t forever and wherever you live, if you need to access people and meetings in the global business centers of the country and the world, you’re going to need a nearby and reliable airport), to name a few of the new location requirements of virtual work.
COVID-19 didn’t start economic inequality, it created a context which exposed it to broader society. The implications for economic developers are direct in that the profession should be on the forefront of leadership to improve the economic situation of society’s most economically marginalized. In every major metropolitan area, there is a bifurcation of economic wealth and poverty. Wealth is increasingly being concentrated in the possession of fewer people and marginalized groups of society are doing poorly and are structurally unable to advance. Economic developers that can help positively impact economic inclusion are going to be very attractive to keep and hire away because the demand for this skill set is so desirable and valuable in the future of economic development.
COULD GO EITHER WAY
These economic development approaches could help or hinder your ability to keep your job depending on how you adapt them to today’s context.
Talent attraction was an emerging trend in the practice of economic development that, if practiced the 2019 way, is going to decrease in value. The old (as in pre-COVID-19) context was that talent attraction was needed to fill the jobs for your local companies because employment was less than 4%. But that is no longer today’s reality. However, talent attraction may get a new life because having talented people live in your community is now more valuable than ever because talented workers in service industries are now able to work from anywhere with an Internet connection. However, talented people can be choosy about where they live and work because they are still in demand, which (using our profession’s jargon) means the “new location infrastructure” will be their site selection criteria.
Although research shows the value of marketing in an economic downturn, marketing is still one of the first line items cut when organizational budgets are reduced. The economic development marketers that will survive the employment axe are those that transform their work from traditional marketing to the new economic development marketing that focuses on rapid communication with local residents and elected officials, engagement with local businesses – with a particular emphasis on small businesses and entrepreneurs, data-driven marketing to assist with reshoring initiatives, dissemination of information to marginalized populations of how economic inclusion will be implemented, and education related to reducing information poverty. Marketers without high levels of digital marketing competence are the most at risk of layoffs as the trend toward economic development digital marketing has only been accelerated because of the pandemic.