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The Latest in Economic Development

May 14, 2012

This week’s blog highlights the results of a new small business survey, identifies how occupational licenses potentially hurt job growth, explores Oregon’s economic gardening strategy, and looks at the “Whole Foods Effect” and the implications of its new store in Detroit. Comment below or send to common@nlc.org.

Get the last edition of “The Latest in Economic Development” here.

This week, Thumbtack.com and the Kauffman Foundation released a small business survey that ranks cities’ and states’ small business environments. A look into the findings reveals:

-          Licensing requirements were nearly twice as important as tax-related regulations in determining their state or city government’s overall business-friendliness.

-          An important predictor of small business friendliness was whether small business owners are aware of the state of local government offering training programs for small businesses.

-          Women were 9% more likely than men to feel supported by their state governments

Get the press release here, or the full report here.

The survey above finds that licensing requirements are important in determining business-friendliness; one example is occupational license requirements, which are a low-hanging regulatory fruit that could potentially boost employment if picked. Dick Carpenter and Lisa Knepper write that “Since the 1950s, the number of US workers needing an occupational license… has grown from one in 20 to nearly one in three.” What these requirements do is restrict supply by increasing barriers to entry for a whole host of jobs and professions, including barbers, interior designers, and message therapists. Carpenter and Knepper explain that the barriers “make it harder for people – particularly minorities and those of lesser means and with less education – to find jobs and build new businesses.” (Wall Street Journal)

The Grow Oregon Council is formally supporting an “economic gardening” strategy, launching its pilot program this past March.   Originating in Littleton, Colorado, and featured in NLC’s recent small business and entrepreneurship publication,  economic gardening focuses on developing home-grown, second-stage companies, rather than allocating resources to attract large businesses from outside the community. In Portland, where local “companies grew by 63.6 percent while nonresidents (headquartered outside of Portland) declined by 8.9 percent” from 1999 to 2009, pursuing and economic gardening strategy seems like a natural fit. One of the key factors of the strategy involves firms gaining playing field leveling market intelligence which Christine Hamilton-Pennell defines as “a process that enables growth-oriented companies to access and use high-level technical expertise and strategic market information to explore new markets and growth strategies.” (neighborhoodnotes.com)

Recent history has been kind to communities where Whole Foods has planted roots. This transformation, known as the “Whole Foods Effect,” has made its mark on communities in New Orleans, Washington DC, and Boston; can it happen in Detroit? Will Doig details why the grocer seems to have a knack for being a catalyst for economic and community development. First is the “seal of approval” Whole Foods brings to the neighborhood. Now known as a symbol of gentrification, when the retailer moves in, people take notice. Second is the “evidence of success that (Whole Foods) generates” by computing tangible metrics (foot traffic, consumer data, etc.) when it enters a market. Developers are able to access this data since Whole Foods is a public company, enabling them to justify further development of the area to potential investors. And third is the retailer’s knack for choosing neighborhoods that are already on their way up. In Midtown, where it plans to open its Detroit store, the average household income of new home buyers is the highest in the city; it is also where the College for Creative Studies is located, which is “packed with free-range foodies.” (Salon)

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