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What Makes a City Business Friendly?

July 11, 2014

This is a guest blog post by Jon Lieber, Chief Economist at Thumbtack


Every year local lawmakers are flooded with studies purporting to tell them what makes their city a good (or in some cases, bad) place for business. The same city can receive a high grade in one report and a low grade in another – this year San Jose ranked 1st in one ranking of “Best US Cities for Small Business” and 121st in another ranking of “Best Cities to Start a Business.” It can be difficult to keep all the different rankings straight.

Thumbtack has developed an annual survey in partnership with the Ewing Marion Kauffman Foundation that differs in one fundamental way from these other lists – this survey asks small business owners directly what they think makes for a friendly business environment. By asking the owner-operators of these businesses about their perceptions of the local business climate, we learn from them what works and what doesn’t work about their governments.

This year nearly 13,000 small business owners participated in our survey – these are largely service professionals such as photographers, personal trainers, and house cleaners who use Thumbtack to find new business. The surveyed group largely reflects the geographic spread and demographic diversity of business owners nationwide, and from their responses we graded 82 cities and nearly every state along 11 metrics of the area’s friendliness towards small business.

For the third year in a row, we found that service professionals valued three things above all others in their local government: a licensing system that is simple and makes compliance easy; a tax system that has clear rules and is easy to understand; and training and networking programs that help service professionals get their businesses up and running, comply with the local rules, and meet other professionals in their industries.

Licensing and regulation

About half of the service professionals in the sample reported that they were required to be licensed by at least one level of government. Of this group, 62 percent said they faced licensing requirements from more than one level of government, while a full 25 percent said they were licensed by all four levels of government we asked about – city, county, state, and federal.

Although professional licensure requirements tended to reduce friendliness scores overall for those who faced them, the comments included with survey responses revealed that licensed professionals were of two minds – one group tended to say the government should back out of their business altogether, while the other group wanted to see an increase in enforcement to prevent unlicensed professionals from undercutting them on price. In general, service professionals did not express a desire for an unregulated marketplace, but wanted regulations that were easy to comply with and did not consume time they could be spending on a job. One pro said that the two days he wasted pulling permits for installing a hot water heater was two days he could’ve been working and earning a living for his family.

Taxes and Training

The effects of licensure requirements were so strong that they were actually twice as important as the friendliness of the tax code in determining perceptions of overall friendliness. When it came to taxes, tax rates were not a major complaint of our respondents – 2/3rds of all professionals say they pay their “fair share of taxes.” Instead what mattered more was the ease of understanding and ease of complying with local tax laws. Professionals who felt they understood their taxes were more likely to say a city was friendly towards them.

Finally, the largest factor under a local government’s control that affected overall friendliness scores was the availability of training and networking programs to help professionals succeed. 57 percent of survey respondents said they had never before run their own business – these professionals wanted to focus on serving their customers, and said they appreciated help from local community organizations in understanding and following the rules of the road for businesses. Professionals who said they knew of training and networking programs offered by the government ranked their governments 10 percent higher than those who didn’t.

The Kauffman Foundation’s Index of Entrepreneurial Activity shows that entrepreneurship can be a safe harbor for cities during difficult economic periods – as individuals lose their jobs during economic downturns, entrepreneurship tends to rise as they turn towards self-employment to keep their skills up or help pay the bills, and it declines again as the labor market recovers. This suggests that cities that create the right environment for entrepreneurs will be better positioned to weather challenging economic periods. Listening directly to entrepreneurs as the Thumbtack survey does can help cities understand which policies are making them small business friendly and which are keeping small business at bay.

Headquartered in San Francisco, Thumbtack is a consumer service that helps millions of people accomplish the personal projects that are central to their lives. Thumbtack introduces customers to experienced professionals who are available, interested and qualified to meet their specific needs. Whether looking for a painter for their home, a math tutor for their child, or a DJ for their wedding, Thumbtack provides anyone in the U.S. with an easy and dependable way to get started, compare options, and hire with confidence.

NLC’s Big Ideas for Small Business report provides helpful strategies for how cities can create a more business friendly environment. 

Lieber headshotAbout the Author: Jon Lieber is chief economist for Thumbtack, where he studies trends in the labor market, entrepreneurship, and the small business economy. He has previously acted as an economic policy advisor for the United States government, serving in the U.S. House of Representatives, the United States Senate, and the President’s National Economic Council at the White House.

How to Boost Your City’s Visibility

July 7, 2014


“Technology doesn’t have to be expensive.” That’s what the sales people tell us. These words trigger the warning bell in our heads. But sometimes it turns out to be true, as the city leaders in Lewiston, Maine (pop. 36,600) discovered in their partnership with NLC Corporate Partner CGI Communications.

Prominent on the city’s website is a new video tour that highlights the community generally and offers a specialized focus on arts and entertainment, economic development, community organizations and quality of life. The high resolution streaming video costs the city nothing. CGI Communications builds the entire package and secures sponsorships from area businesses.

I have never been to Lewiston, but now, thanks to the video, I know lots about the community and am looking for an excuse to host an event there. The historic buildings in the downtown are enough to draw my interest and the Lewiston Art Walk is an added bonus. Likewise, the access to the natural world – hiking trails, river kayaking and a wildlife preserve – complement the built environment.

While we all might be drawn to a place because of its natural beauty, its architecture, its amusements and amenities, most of us still have to earn a living. The Lewiston videos offer information on the economic strengths as well as the artistic and recreational opportunities. The economy is diversified across health care, manufacturing, financial services and telecommunications industries. The local fiber optic network serves both businesses and residents and the riverfront development projects represent significant commercial investments.

Video on a city website is not new. But smaller cities like Lewiston tend to spend their local resources on direct service delivery. A web portal, while essential in the present era, is often a no frills site. Lewiston, through its public private partnership with CGI has shown that the city can have the frills and still spend community dollars on key local services.

Brooks, J.A. 2010About the Author: James Brooks is NLC’s Director for City Solutions. He specializes in local practice areas related to housing, neighborhoods, infrastructure, and community development and engagement.  Follow Jim on Twitter @JamesABrooks.

Cities Expanding Health Access for Children and Families Initiative: Lessons from the Planning Phase

July 3, 2014


After a very short six months, we have come to the conclusion of the Cities Expanding Health Access for Children and Families (CEHACF) project’s planning phase. On May 30, 2014, NLC received business plans from all 12 cities for outreach campaigns to enroll children and families in Medicaid and the Children’s Health Insurance Program.

Business plans are currently under review and NLC will select approximately six cities to receive implementation grants in July 2014. These grants will support cities with up to $260,000 each and ongoing technical assistance over 18 months during the initiative’s final phase to implement outreach campaigns.

Medicaid and CHIP are the nation’s two most important public health insurance programs for families, and are available year-round. Unlike purchasing private insurance through the Marketplace, there is no open enrollment period for Medicaid or CHIP which will allow eligible families to enroll at any time.

Mayors and local elected officials have a vested interest in connecting children and families to Medicaid and CHIP, providing a powerful role for cities to play in making that connection. NLC has learned some important lessons through the CEHACF planning phase which are outlined below to help interested city leaders with campaign planning.

  1. City Leaders and Stakeholders are Motivated by Better Health Outcomes for Kids
    During the planning phase, we anonymously surveyed initiative participants consisting of local elected officials, senior city staff members, school administrators, representatives from hospitals and clinics, and other community partners to understand what motivated them to become involved in health benefit outreach. The number one response from 29 out of 33 respondents was to help create better health outcomes for kids. The number two response from only two respondents was to reduce city costs related to uninsured populations. The cynic in me found this discovery very surprising, since I thought the primary motivating factor would be financially-rooted, but it turns out community leaders just want kids to have a healthy start in life! With this information, we hope city leaders can better develop messaging strategies to enlist and motivate community partners to engage in health benefit outreach.
  1. Assess the Market
    In the private sector, the saying goes, “know your customer.” Similarly, to effectively reach families and connect them to Medicaid and CHIP, local leaders need to understand their target audience(s). As part of the planning phase, initiative participants were encouraged to conduct market analyses through community surveys, focus groups, and interviews to learn about the specific needs, attitudes, and preferences of target populations. Through this exercise, initiative participants not only gained an awareness of community outreach needs, but also an understanding of existing services and how to fill service gaps. With greater knowledge about community needs, cities can custom design outreach strategies tailored for their communities, which will hopefully lead to more effective outreach and enrollment strategies.
  1. Sustain Outreach and Enrollment Initiatives by Incorporating them into Existing Systems
    At the planning phase cross-site meeting in March, one participant shared that unless new outreach and enrollment initiatives can be sustained over time, they should not even be initiated. This statement really struck me, as it did—I think, for many other meeting participants. The statement led us into a discussion about how to sustain outreach and enrollment efforts, and through this dialogue, we concluded that efforts can be more readily sustained if they are incorporated into existing community programs and systems. This might be done through 2-1-1 information and referral systems, parks and recreation departments, libraries, school districts, or Head Start offices.  There are many other ways to incorporate outreach and enrollment efforts into existing city programs and systems and city leaders can be creative in considering existing community structures that can help sustain efforts.

As we move into the implementation phase of the CEHACF initiative, we will continue to share our lessons with the hope that more cities will be motivated to develop outreach and enrollment campaigns. After all, children and families in communities all over the U.S. are currently eligible for Medicaid and CHIP, but may not know it. All it might take is for a city leader to help make a connection!

For more information about the CEHACF initiative, contact Chuan Teng at to find out which cities will move into the implementation phase, please visit the Institute for Youth, Education and Families website on July 14!

More than money: Alternative incentives that benefit companies and communities

June 30, 2014

Construction in Raleigh, N.C.

Post adapted from Smart Incentives

Specialized services can complement financial incentives, while taking the concept of a partnership between business and community to a new level. Guest blogger Swati Ghosh, the International Economic Development Council‘s Director of Research and Technical Assistance, reports below on an interesting new paper addressing these and other alternative incentives.

Of all the tools that economic developers use to attract businesses to their community, incentives are the most controversial. Typically financial in nature, incentives are direct subsidies to businesses in the form of tax breaks, loans or grants. Proponents maintain that such subsidies are necessary to grow jobs locally as they reduce the cost, or risk, of doing business in a community. Critics, on the other hand, argue that there is no direct link between economic activity and such business subsidies, and some even suggest that they are a drag on economic growth.

Economic developers should closely follow an emerging alternative – programs and services that assist businesses but are not direct financial subsidies. Termed alternative incentives, these are investments in community programs that strengthen the business climate or that help a particular business in a way that benefits the broader community. They are a win-win: For businesses, alternative incentives can reduce the cost or risk of doing business in a community, yet communities retain these investments even if a firm shuts down or relocates to a different community.

IEDC’s Economic Development Research Partners program has developed a new paper focusing on alternative incentives. It is not an argument against the use of financial incentives; rather, it advocates for increased use of alternative incentives either alone or in conjunction with financial incentives. The paper, “More than Money: Alternative Incentives that Benefit Companies and Communities” (PDF), examines five categories of alternative incentives:

  • Talent/Workforce development
  • Real estate and permitting
  • Research and data
  • Networking and promotion
  • Infrastructure improvements

The paper is based on a survey of the IEDC membership to understand usage of over 40 different types of alternative incentives. It also includes several examples of organizations that have successfully utilized alternative incentives for business attraction and expansion, alone or in conjunction with other financial incentives. The paper concludes with recommendations for ways that economic developers can use alternative incentives effectively:

  • Focus on building relationships
  • Examine your organization’s strengths and utilize them creatively
  • Offer a wide spectrum of services
  • Bring along the key stakeholders
  • Focus on the needs of the community

As scrutiny, clawback provisions and other restrictions on the use of financial incentives increase, it may be beneficial to examine other options to support businesses. Alternative incentives not only stay in the community, but bring less of a burden in terms of monitoring and legal costs – benefits that every community and EDO can agree on.

90 Years of Helping City Leaders Improve the Local Business Climate

June 30, 2014

Seattle, Washington

“How does a city government work with local industries, businesses, and institutions to keep them in the city and improve communications with them?” This crucial question was raised by Mayor Sam Schwartzkopf of Lincoln, Nebraska, in a 1968 article in NLC’s previously published Nation’s Cities magazine titled “You Have to Work to Keep Industry.” In today’s economic climate, the issue of business retention and expansion remains a prominent issue for city leaders and economic developers.

While many mayors and city councils across the country recognize the value of attracting new industries and businesses, there is also a growing emphasis on fostering local talent and supporting entrepreneurs and small businesses.

Mayor Schwartzkopf suggested back in 1968 that NLC members should consider adopting a city program he launched in Nebraska to personally visit local shops and companies and ask how the city can be of service to them. The Mayor and his team aimed to meet with as many of the city’s 300 firms as possible.

“Although the attraction of new firms and industries to any community is always extremely important, I feel that city government today must show its present industries that city government is deeply interested in them and that city government wants them to be interested in their city,” Schwartzkopf wrote in his article. “I strongly feel that city government must know what its industrial, business, and institutional leaders are thinking; what they would like to see done within the city.”

Some of the business assistance that Mayor Schwartzkopf provided as a result of his visits included providing increased police presence to an outlying industrial neighborhood, removing street parking to help reduce traffic congestion, modernizing street lighting, and dispatching city engineers to inspect the quality of a storm sewer near a steel company.

This type of support for the local business community is very similar to what we see today from cities involved in NLC’s Big Ideas for Small Business network. Our recent report on small business development highlights two key strategies for developing a business-friendly climate – proactively engaging the local business community and creating advisory councils with representation from small business.

As we highlight in the report, the city of Seattle’s Business Retention and Expansion Program (BREP) strives to retain and grow early-stage business through proactive outreach initiatives. The city staff who lead BREP aim to provide 250 businesses with direct assistance every year. The Seattle program has already helped hundreds of businesses find funding opportunities, select new site locations, and navigate government regulations.

In Cincinnati, the city formed a Small Business Advisory Committee (SBAC) as a mechanism for the local small business community to advise city officials on policies and programs. The SBAC voices the concerns of business owners and works in collaboration with city officials to find solutions to common problems. One of the city’s accomplishments since the establishment of the SBAC has been to streamline the permitting process by creating “jump teams” of city employees that work in coordination to assist small businesses.

While the economic landscape has evolved in many ways since 1968, Mayor Schwartzkopf from Lincoln knew back then what remains important today: getting the business friendly basics right is critical to supporting and growing local businesses. NLC is grateful to still be providing research, education and best practices about how cities can do just this.

From Low-Skilled to College Ready: Building Pathways for All Youth Who Drop Out- Part 3

June 30, 2014

Flickr: Gates Foundation

This post was written by Peter Kleinbard, a consultant who works with organizations serving adolescents. It is the third in a series on dropout reengagement, drawn from the case study: For Young Adults Who Drop Out: Pathways or Merely Stops along the Way? which details the work of two community organizations. The study is funded by the William T. Grant Foundation and The Pinkerton Foundation. To comment, write

In the previous post I highlighted two programs for young adults who have dropped out of school and how they have gained flexibility by convincing funders to support longer periods of service. This post focuses on a major gap in serving youth who have dropped out, the quality of classroom work.

Many young adults drop out because of their struggles in the classroom. While our field has often focused on counseling and work experiences, further education is essential to achieve economic independence.

In the study, Dropping Out: Why Students Drop out of High School and What Can Be Done About It, Russell Rumbergpulls together leading research and concludes: “educational performance…is the single most important predictor of whether students drop out or graduate from high school.” Academics are highlighted again in a recent study that tracked a single cohort of New York City students from elementary through high school: “and only one in three of the students who failed to meet the third-grade [English Language Arts] standard [emphasis added] graduated from high school.”

While numerous factors may contribute to dropping out, such as those highlighted in America’s Promise Alliance’s recent report, disengagement stemming from academic struggles is nearly always central. For young adults to build skills in reading, writing, oral communication and math, they must become engaged in learning. When instruction is done well, young adults take pleasure in learning.

Interviewed youth affirmed research findings as to what keeps them engaged in learning:

  • High interest materials
  • Activities that feel tailored to them as individuals
  • A sense of control from knowing where they stand and what more they need to achieve
  • Caring staff who expresses belief in their success

A Model for Engaging Young Adults in Academic Study

In my study, Site A adopted a model developed by an intermediary rather than creating its own program. Community Education Pathways to Success (CEPS) integrates research findings from youth development with those from instruction and is designed to address the needs and strengths specific to young adults. In this guide, I focus on the literacy component, though the work in math is similar. (For purposes of transparency, I was involved in the development of CEPS.)

The program created a structure of progressively more demanding classes, so that a young adult who enters at any skill level can move up to college preparation. Teachers receive training and ongoing coaching in delivering instruction. For example, they are taught to use high-interest books at reading levels that enable students to experience mastery. Assessments are used both to place students in classes and to target specific skill gaps. Non-instructional staff are trained how to reinforce the work of instructors and meets regularly with instructors as a team to strategize about students. The emphasis is on consistent and systematic application in the classroom and other program components.

Classes are highly structured and therefore follow the same sequence of activities each day. Work is familiar and comfortable to students, even as it increases in difficulty. While focusing on instruction, the model reshapes the entire program as an integrated whole, addressing counseling, transition planning and other components.

Following an encouraging evaluation, the city in which Site A is based adopted the model and is funding several sites to implement it, adding a work experience component. These and other strategies are detailed in documentation about the model and a three-year evaluation of eight sites.

As readers know, the path to financial independence is long and uneven for many young people, especially those with poor skills. For students that desire immediate work experience, Site A’s staff tries to place them so that their work schedules allow continuation in education. In other sites, young adults who had gained solid work skills – carpentry or using common software – acquired jobs, though rarely steady, that provided income so that they could continue their studies. Although many returned, for others there were periodic hiatuses in their participation.

Our challenge as a field is to make sure that we support the hopes for success of young adults with engaging and effective programs. Some are ready to move ahead when they come to our doors; others will need time before they are ready to sustain their commitment. For practitioners, this requires flexibility, a high degree of commitment, and a determination to find and implement approaches with solid evidence of success.

Peter KleinbardAbout the Author: Peter Kleinbard is a consultant who works with organizations serving adolescents. From 2001 until 2010, he was executive director of the Youth Development Institute, a national intermediary based in New York City. He also founded the Youth Transition Funders, an affinity group for foundations.

Citizen Engagement Means More than Just Voting

June 27, 2014


Democracy. In the very root of the word is the notion that it is the people who rule. It is engrained in all Americans that in our country, government is by the people and for the people. Of course, for this to be true, the people must be involved. Citizens must be actively engaged in every level of government if our country is to run as we believe it should.

In recent studies by the National Conference on Citizenship, it has unfortunately been discovered that this ideal is not being met. Citizens are not showing the levels of civic engagement that democracy requires, and that our cities need in order to flourish.

In one study on South Carolina, it was found that while the state’s citizens ranked highly for “traditional forms of political involvement” (voting in national elections and registering to vote), they were near the bottom of state rankings in other, more subtle forms of civic engagement: boycotting products, contacting elected officials, forming strong relationships with neighbors, discussing politics and participating in local meetings regarding matters of school or city policy.

In a separate study looking at Washington, D.C., the findings again made clear that just because members of a community vote, there is no guarantee that they are then engaged in the community in other ways. While residents of D.C. have consistently high rates of voter turnout, they are unlikely to have strong relationships with neighbors, rarely eat dinner with other members of their household and while they volunteer at rates higher than the national average (coming in at 32.2%), this still quite low compared to the number of voters.

Between the two studies, it was found that political and civic engagement, in almost any form, is strongly correlated to not only a person’s income, but also to their level of education. While the studies referenced here look at fairly large population areas (the state of South Carolina as a whole and the city of D.C.), in cities with higher numbers of low-income residents with lower levels of educational attainment, there are clear reasons for concern. As elected officials, it can be challenging enough to work with the many different voices that arrive at the table; it is next to impossible to work with the voices that cannot even be found.

Given that a strong community is one that works on behalf of all its residents, it is imperative that citizens from all walks of life exercise their right to be both civically and politically engaged. As new technology is being developed, it is becoming easier than ever to encourage citizens to raise their voice. Emerging apps allow citizens to express needs for city services in real-time and allow elected officials to engage with residents who might never step foot in City Hall.


In Washington, D.C., the website “Grade D.C.” has been developed as a way for residents to provide feedback on the quality of city services and departments, from the public school system to the police department to the Department of Employee Services. In allowing the community to assign a grade to the work being done by government-run entities, not only do citizens have a voice to express their appreciation and frustrations, but they are able to see the feedback provided by others, and use that to make informed decisions as to the city agencies with which they choose to interact. By establishing this innovative online format to provide feedback to the city, leaders in D.C. have created a non-threatening way to engage with citizens who may not be willing to go to City Hall, yet have a vested interest in ensuring that city services are provided smoothly and effectively.

In Philadelphia, a similar desire to engage citizens led to the creation of the tool “Textizen,” as one piece of the New Urban Mechanics movement. Now being used in both Boston and Philadelphia, Textizen permits residents to text in their thoughts and opinions on any and all city projects, dramatically increasing the number of voices that are able to be heard on any one issue. Taking this concept a step further, Boston has developed the “Citizens Connect TXT” program, which gives anyone in the city a way to notify the city of local problems, from graffiti in public spaces to unlit streetlights and other safety hazards. In providing a simple way for citizens to contact their local government, these cities are actively encouraging civic engagement on the part of all

As members of the National League of Cities push to see their cities become centers of innovation, it is important to remember the necessity of including all citizens in this push forward. This is by no means a simple job, yet cities around the country are showing that they are able to rise to meet the challenge by thinking outside of the box and truly valuing the many different voices in their communities. When city officials intentionally choose to harness the powers of technology, the ideals of democracy come closer to being achieved, even in a world that has changed immeasurably since our nation was founded.

Coleman PictureAbout the author: Molly Coleman is an intern with the National League of Cities University.


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