Ball State study: State too focused on landing 'footloose' jobs

June 21, 2016

Indiana and the nation need to rethink their economic development strategies, which are excessively focused on trying to land large factories—an increasingly difficult task, according to a study by Ball State University's Center for Business and Economic Research.

The report, written by CBER director Michael Hicks and published Monday, found that less than 1 percent of jobs nationally can potentially be attracted to a region, and that fewer than 100 factories of 500 or more workers open in the United States each year.

According to the study, Indiana reported providing $2.2 billion in incentives to companies since 2010. Officials credited the investment for creating 50,600 jobs—which works out to a cost per job of $43,700.

Hicks said the most significant job growth came from existing companies. Eighty-four percent of new jobs in Indiana from 1995 to 2013 were the result of existing companies expanding.

Hicks said the economy has changed over the last 40 years, but economic development strategies have not kept pace.

Americans are buying more services, but economic development officials remain fixated on the dwindling number of “footloose” jobs, those that can be located anywhere without concern for local demand.  

“We’re chasing the one part of the economy that is shrinking,” he said.

Business location is much more dependent on “quality of place” than incentives, Hicks said. The report cites research that shows amenities and taxes are keys to fostering a community’s prosperity.

The study found that in 2008, a year when the nation was in deep recession,  Indiana offered more than $153 million in subsidies to companies, but the state lost 28,000 jobs, and gross assessed personal property declined by $169 million.

Hicks said regional and statewide economic development efforts are necessary. But he questioned the value of single-county economic development organizations, which are common across the state.

“Even if you attract a business to a county, the benefits will be seen where the workers live,” he said.




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