Section » Michigan Cities
Welcoming West Michigan?
As readers of our work know, we believe that culture trump policy. In a world where economic growth is driven by knowledge and innovation, the most successful regions are those which highly value learning, an entrepreneurial spirit and being welcoming to all. The evidence is that Michigan is having trouble with all three.
More evidence of our welcoming challenge comes from Holland where the city council recently voted against adding sexual orientation and gender identity to its anti-discrimninations policies. MLive has a good overview article. What is encouraging is the reaction from the business community which understands how being gay friendly matters to the region’s current and future prosperity. The article includes: “I’m concerned about Holland’s ability to keep and attain talent because, in the future, there will be a talent war,” said Dean Whittaker, whose Holland-area consulting firm, Whittaker Associates, supplies companies with market research data. And: “We’ve heard it’s not just about recruiting gay people, it’s about recruiting people who want to live in an open and accepting place,” said Jeff Padnos, president of Louis Padnos Iron & Medal. “I think the vote was an unfortunate statement about our community.”
The West Michigan business community, through its innovative talent attraction organization Quaeris, organized a forum with the mayors of Grand Rapids, Norton Shores and Holland to discuss attracting and retaining young talent to the region. As MLive reported the event underscored the different approaches to growing the region’s economy. As they wrote, Grand Rapids Mayor George Heartwell said: “What cities can do to attract talent has more to do with place-making. If you create a vibrant area where people want to be, then I think (recruitment) happens.” … Butting heads with Heartwell, (Holland Mayor) Dykstra said tax and regulatory policies are the best means to attract talent and economic investment. “Capital goes where it’s welcome,” Dykstra said. Said Heartwell: “Place trumps tax rate any day.”
Melissa Preddy in a terrific article for the Center for Michigan reminds us that gay friendly is a statewide, not just West Michigan, issue. She contrasts what is going on in Michigan to New York where big business was a vocal supporter of the state’s gay marriage legislation. She writes: … a powerhouse group of industry leaders signed a public letter to lawmakers urging marriage equality for gays. The signers, including the chairmen of companies such as Alcoa, General Electric and Goldman Sachs, along with chief executives and senior managers at other household-name corporations, made an economic case for legalizing same-sex marriages. They wrote: “To remain competitive, New York must continue to contend with other world cities to attract top talent. Increasingly, in an age where talent determines the economic winners, great states and cities must demonstrate a commitment to creating an open, healthy and equitable environment in which to live and work,” …
She quotes State Representative Jeff Irwin as summing up the Michigan approach as: “There’s been a lot of energy spent in trying to shut down the equal rights we should be giving to everyone,” Irwin said. “What’s going on in Lansing now sends the wrong message to the rest of the world and we risk turning people away. Michigan will be a more economically prosperous place when we try to bring the best and brightest here. Inclusiveness is a big part of that.”
All of our work supports Mayor Heartwell and Representative Irwin’s beliefs that it is talent – which chooses the place where they want to live and work – that is driving regional and state economies. And that welcoming to all is one of the place characteristic that many of them are looking for.
Detroit growing
Last May I wrote that the city of Detroit should focus on growing, not shrinking. As contradictory as it sounds the city needs to do some of both. But the priority needs to be growth. As I wrote:
Detroit’s problem is not that there is no demand for central city living. The last two decades have seen a rebirth of urban neighborhoods that were written off as dead across the country. They have largely been revitalized by a combination of immigrants and college educated households – mainly young and without children. Detroit’s problem is that it has not participated at any scale with these trends. Detroit needs an agenda to take advantage of the renewed demand for city living.
Two recent articles demonstrate that growth is possible. Both focused on young talent moving into the city. In fact, despite all the naysayers who have written Detroit off, growth is occurring in the city today. The Detroit News article is entitled: Cool factor lures the young, artsy to Detroit. Detroit’s renewal is also garnering national attention. The New York Times story is entitled: Detroit Pushes Back With Young Muscles. I recently did an interview with a video journalist from the Financial Times who, as part of a rust belt story, is interested in Detroit’s Live Midtown initiative.
The Times writes: The scene might have been run of the mill in Seattle or Williamsburg, Brooklyn, or other urban enclaves that draw the young, the entrepreneurial and the hip. But this was downtown Detroit, far better known in recent years for crime, blight and economic decline. Recent census figures show that Detroit’s overall population shrank by 25 percent in the last 10 years. But another figure tells a different and more intriguing story: During the same time period, downtown Detroit experienced a 59 percent increase in the number of college-educated residents under the age of 35 …
For most of Michigan, and unfortunately many in Detroit, the notion that the city could be compared to Seattle or Brooklyn is not believable. But not to young professionals. The News writes: “My friends in New York, L.A., Europe all think Detroit is really cool, and, thankfully, so do more and more people here. The energy seems great right now,” said Angela Topacio, an artist and managing partner of Gyro Creative Group downtown.
Obviously at the moment the growth is at a small scale. Hundreds of new residents, stores and businesses, not the tens of thousands the city needs. But it is evidence that growth is possible. And that growth not only matters to the city, but to the region and state as well.
Governor Snyder was both courageous and right when he campaigned across the state with the message that Michigan cannot succeed unless Detroit succeeds. The reality is there is a clear pattern across the country: the most prosperous states are either rich in energy resources or are anchored by an even more prosperous big metro with a vibrant central city.
The revitalization of Detroit that is enabling the growth has been led by foundations, anchor institutions, business leaders and community development organizations. The Hudson-Webber Foundation and Dan Gilbert – both featured in the Times article – have been particularly visionary in their leadership. As well as the energy and dedication of the young professionals who now call Detroit home.
It is time for city, regional and state policy makers to get more active. The region and state have a big stake in Detroit becoming a talent magnet. As we have written before the priority for city leadership is to be far more welcoming to all, development friendly and to provide quality basic services – starting with safety – and amenities. For the region and state the priority is to help with the investments that matter: starting with making Woodward light rail a reality but also finding ways to reverse the cuts in revenue sharing and the ending of historic preservation and brownfield tax credits. At the moment city policies and practices as well as regional and state policies are a headwind hindering Detroit’s growth. That needs to change!
Key quality of place characterisitcs
Finally had a chance to read the Knight Foundation’s 2010 Soul of the Community report. Conducted by Gallup it identifies the attributes that most drive community attachment. What is of particular interest is the finding that the more attached an area’s residents are the better the region’s economic growth. Metro Detroit is one of the 26 communities included in the annual research. (You can watch a great overview of the study here.)
What Gallup found is the three characteristics that matter most to an area’s quality of place are: social offerings, openness and aesthetics. Other characteristics they tested include education, basic services, economy and safety. As the report’s authors write: While the study also measures perceptions of the local economy and basic services, these three factors are always more important in terms of their relationship to community attachment. … it does make it clear that these other factors, beyond basic needs, should be included when thinking about economic growth and development. These seemingly softer needs have an even larger effect than previously thought when it comes to residents’ attachment to their communities. More evidence that quality of place really matters to economic growth!
So what does Knight mean by the three key attributes: social offerings, openness and aesthetics? Social offerings are places for people to meet (what has been called third places) and the feeling that people in the community care about each other. Openness is what we call welcoming to all. How open/welcoming is a community to different type of people. Aesthetics is physical beauty including parks and green spaces. Certainly not the traditional list of drivers of economic growth. The studies’ message: regions had better pay attention to these attributes if you want a strong economy. If people don’t want to live and work in your community you can’t have a strong economy!
Using the report as his starting point, Jeff Meyers in Metromode wrote an interesting article entitled: What Makes Detroit Stick? Worth reading. It explores how well metro Detroit is doing on the Soul of the Community attributes. Not surprising it finds we have considerable work to do on all the top ranked quality of place attributes. I’m quoted in the article. Jeff concludes with my answer to the question “Will change come here?” My answer: The honest assessment is that the kind of attributes in the survey, and the kind of attributes we’ve been talking about, and the kind of attributes presented in your publication were not even part of the public conversation 10 years ago. So, we’re in the conversation. We’re making progress in getting people to think about these issues. But certainly we’re not yet at the point where people are willing to make it a priority. Lets hope we make it a priority quick.
Taking talent seriously in Lansing
“Either we get younger and better educated or we get poorer” is the slide we close all our presentations with. It captures our core belief that talent is the asset that matters most to Michigan’s future prosperity. And that because recent college graduates are the most mobile group in the country that where they decide to live and work after college will go a long way towards determining the future of the Michigan economy. Still with most Michiganians a hard sell.
But not in metro Lansing. A terrific new report from Capital Area Michigan Works! on behalf of the region’s impressive Talent Infusion Strategy Team and Advisory Committee touches all the bases needed to make retaining and attracting young talent a regional priority. Their work is worth checking out by Michigan’s other big metros. The authors understand the strategic importance of young talent. As they write: The decline of the 25- to 34-year-old group should be alarming to us. Moreover, we are not a fast growing metropolitan center overall and the key to becoming one is attracting young people.
The report includes a detailed data analysis. How has metro Lansing done from 2000-2010 in terms of concentrating young talent? Their honest assessment: not too well. And particularly not well compared to other regions across the country with a similar sized population and a major university.
Just collecting the data is impressive. But the report continues with a description of the work the region has done researching what young talent is looking for when they make a location decision. As they write the bottom line is: it’s all about placemaking! Most of the group believes engaging young talent is very much about creating a robust and vibrant place: Greater Lansing should continue to work on all the things that make the region a better place to live. In other words, if we make it a better place to live, “they will come,” and they will stay. Expanding the arts and culture scene, improving the region’s appearance and amenities and providing a lively entertainment culture are a few examples. Further, creating a pipeline to jobs and career opportunities is equally important …
One particularly creative initiative is the effort to make metro Lansing a place where Chinese students want to stay after college. The report highlights: … international placemaking efforts got under way when it was learned that there were few opportunities in the region that represented the street culture so familiar to Chinese students at MSU. As a result, Gillespie Group launched the China Creative Space, a proposed creativity center to create an atmosphere for cross-cultural collaboration and innovation among students, entrepreneurs and the community at large.
Wow! A Michigan region that has organized a Talent Infusion Strategy Team, done a detailed analysis of the region’s success in retaining and attracting young talent, researched the location preferences of young talent and is working to make Chinese students welcome. Metro Lansing is on the right track.
Quality of place in the news
All of a sudden a lot of media reports on the importance of creating quality of place – particularly vibrant central cities – in growing the Michigan economy. Hopefully this media attention is a harbinger of policy maker attention. Because it sure isn’t on Lansing’s priority list at the moment. (If it ever has been!)
Here are reports that are worth checking out:
• A terrific piece by Rob South of WKAR radio on the importance of retaining and attracting young professionals to metropolitan Lansing.
• Two columns worth reading from Nathan Bomey for AnnArbor.com. (You can read them here and here.) They are both about how the success of Detroit is essential to the economic success of Ann Arbor. One of the columns is entitled: A vibrant Detroit would make it easier for Ann Arbor companies to attract talented young professionals. Believe me most folks in Ann Arbor – and the rest of metro Detroit – still don’t believe that. But they are wrong. Bomey quotes Bruce McCully, founder of Ann Arbor-based information technology consultancy Dynamic Edge who is one of the few that gets it. He is right on when he says: This isn’t going to be popular, but Ann Arbor is kind of a suburb of Detroit. We may live in our own little world because of the university and a lot of effort that goes into creating jobs and new technology along with the university. However, if Detroit fails, so does Ann Arbor.
• A surprisingly positive article in the Flint Journal on downtown Flint. Yes Flint. Another of those cities that conventional wisdom has consigned to the graveyard. Try telling that to the folks living in downtown Flint quoted in the article.
Worth checking out
Some interesting items that are worth checking out:
• CNN did a terrific report on high tech job growth in metro Detroit. Going so far as to ask whether Detroit is the new Silicon Valley. Yes dead and gone Detroit! Not to mention the state with the worse business tax in America that drives away business investment. Both of course are nonsense. As we have written repeatedly Michigan’s lost decade was caused by the collapse of our preeminent industry – not state policy – and as the auto industry restarts we are creating jobs again with the same state policy that was in place when we had the worst economy in the country. What is most important about the CNN story is that the job growth they feature is knowledge-based. As the story points out the auto industry is a major employer of technology workers. It is the growing part of the industry and we need to make sure that as much of that growth as possible happens here.
• Two articles on gay rights. The first by Thomas Costello, CEO of the Michigan Roundtable, points out the price we pay in terms of economic growth by being anti-gay as the Legislature works to deny benefits to same sex partners of state employees and to impose financial penalties on state universities that do the same. The second from the New York Times which reports that more and more firms are increasing domestic partner benefits for gays. They are doing this both because it is the right thing to do but also because it is a competitive advantage in recruiting talent. The Times writes: The competition has become most apparent in a handful of industries, notably law firms, big consulting companies and in Silicon Valley. More Wall Street firms, meanwhile, are said to be considering the policy. Knowledge-based industries where most of the job growth in the country is occurring. The kind of companies Michigan needs to attract. When will we learn that welcoming to all is an essential characteristic of the most prosperous places?
• A terrific column in Metromode by Francis Grunow on regionalism in Portland, Oregon. We have written previously about Portland needing to be the model for Ann Arbor. Restricting growth in the hinterlands, high density in the city. Francis makes the case that they are a model for all of Michigan’s big metros – particularly metro Detroit. They have created a region anchored by a vibrant central city and have made regionalism work and are reaping the benefits from both. Francis writes: Detroit is our state of mind, our gold standard … a single economic unit. And whether we like it or not, Detroit is our common denominator and common destiny. If we agree that Detroit’s destiny and the region’s destiny are one and the same, we must certainly also agree that we all have common issues with common solutions. Another lessons we need to learn sooner rather than later.
The case for raising taxes II
Terrific Larry Gabriel column in the Metro Times. It is about the causes of Detroit’s horrible population decline. Now the 18th largest city in the country, down from 4th. As Gabriel points out the problems may be worse in Detroit, but the whole state is facing the same challenges. Too many mobile individuals don’t want to be here!
Much of Gabriel’s column is based on the must read speech Paul Hillegonds gave at Grand Valley. Gabriel writes:
Hillegonds told me over the weekend… “Having worked for 15 years in the city of Detroit, through my experience at Detroit Renaissance and DTE, you realize that a cornerstone of urban revitalization is K through 12 and higher education. You need educated twenty- and thirtysomethings who want to live in the city. You can’t sustain that growth without some public investments. It’s not that taxes are unimportant to the business climate, but a more highly educated workforce is more important.”
Hillegonds has turned around on some issues because he paid attention to the facts rather than ideology. He pointed out some revealing statistics in his GVSU address.
“In 2008, of the 55 U.S. metro areas with populations of 1 million or more, Detroit ranked 33rd in knowledge-based industries concentration, 36th in per capita income and 37th in college attainment. Metro Grand Rapids lagged even more, ranking 54th in knowledge-based industries concentration, 53rd in per capita income and 45th in college attainment. Over the past 10 years, state funding for higher education has been cut by 27 percent. Michigan is now 42nd among the 50 states in per capita support, reflecting the fact that higher education has been a less important state priority than prisons and tax cuts. … Michigan Future’s analysis of extensive tax and economic data found that the most successful states are not characterized by low taxes. If anything, they tend to be more high-tax states than low. On the other hand, states with the lowest taxes tend to have lower per capita incomes, lower concentrations in knowledge-based enterprises and lower proportions of adults with four-year degrees or more.”
As Paul said: “You can’t sustain that growth without some public investments. It’s not that taxes are unimportant to the business climate, but a more highly educated workforce is more important.” End of story!
The reality is Michigan’s lost decade came when we were lowering taxes (that’s right taxes went down, not up) and cutting public investments in higher education and quality of place (think revenue sharing, the arts, transportation, etc.). That is the recipe for getting poorer.
the Snyder budget II
Most of the questions I have received have been about how well the Governor’s budget will help in growing the Michigan economy. In addition there also is the question of how well the proposal tackles the state’s structural deficit. They both matter.
In terms of dealing with the deficit I give the Governor high marks, in terms of using the budget to grow the Michigan economy far less so. Let’s start with what is to be commended:
• The willingness to eliminate the deficit without gimmicks.This is the most serous proposal we have gotten over the decade we have had a chronic deficit. It’s about time!
• Broadening the income tax. Particularly taxing pensions. Courageous and necessary.
• Eliminating most of the special tax breaks for specific industries. Particularly the film tax credit.
• Reigning in health care costs, without reducing services that Medicaid funds. In a climate when cutting programs for the poor is rampant the Governor deserves lots of praise for preserving the health care safety net.
• Through a variety of devices – both carrots and sticks – taking on unsustainable state and local employee compensation, particularly benefits.
If these were the basic pillars of a budget designed to deal with the structural deficit it would be quite good. A balance between tax increases and spending cuts, including public employee compensation. But, of course, that is only part of the Governor’s proposal. He – like us – believes the budget should also be used to grow the Michigan economy. His strategy: a big business tax cut. Something like $1.8 billion. Larger than the deficit he inherited.
As we have written repeatedly there is no evidence that low business tax states, states that tax businesses based on profits rather than gross receipts and/or those that only tax C corporations have better economies. For every state with some combination of these features with a strong economy there is a state with the same features and a weak economy. And the reverse is true: some states without these features with both strong and weak economies.
But ultimately what is most troubling is not the big business tax cut. What is most troublesome is that the Governor has proposed a net $200 plus million cut. Tax cuts haven’t helped the economy the last decade and aren’t going to help going forward. Ultimately as we wrote previously we need a tax increase to at least partially reverse a decade of giving away our tax base. But in this political climate revenue neutral would have been the right balance.
And the Governor would have had business support for that kind of approach. A better idea was the business tax reform plan of Business Leaders for Michigan. The CEOs of Michigan’s largest corporations proposed a far more modest and balanced approach to reforming business taxes. Eliminating the MBT surcharge and other changes and offsetting the cost dollar for dollar with a sales tax on consumer services.
Why is revenue neutral now, and a net tax increase ultimately, important? Because without more revenue, funding the public investments that will best help the economy is impossible. In fact we will continue to disinvestment in them. Which, of course, is what the Governor has proposed. His education cuts are broader and deeper than before; larger cuts to universities and, for the first time, real cuts to k-12. And he continues the decade long onslaught against revenue sharing, which makes it more difficult for local governments to provide the quality of place that is key to retaining and attracting talent.
The big picture is that Governor Snyder’s budget continues the now decade-long pattern of his two predecessors: tax cuts accompanied by cuts in higher education and support for local government. It is a strategy that hasn’t worked the last decade and won’t in the future. In an economy increasingly driven by talent the strongest levers available to states to grow the economy are human capital development and quality of place. Those should be the budget priorities.
• Copyright 2009 • Twitter: #michiganfuture