3 ways cities can redefine their economic trajectories

Every city in America possesses a unique economy and culture. Their values and priorities cannot be captured in a one-size-fits-all prescriptive agenda for regional economic development.

Broadly speaking, a high concentration of advanced or complex industries can generate positive spillovers, allowing cities to push the frontier and accelerate growth. Think of Silicon Valley in California, the life-sciences and high-tech Research Triangle in North Carolina, or the financial sector in New York City.

Yet there are many more ways for regional economies to develop. Around the country, complex, synergistic, and seemingly unexpected industry combinations have taken root. Lebanon, Missouri, a landlocked town, has the highest concentration of ship and boatbuilding activity in the country. Idaho Falls, Idaho has a higher concentration of workers in scientific research and development than any superstar city, largely fed by a federal nuclear research facility. And manufacturing in Sherman, Texas is undergoing a renaissance. Even as legacy heavyweight Texas Instruments moves elsewhere, the company leaves behind robust capabilities: Sherman’s talent pipeline and efficient infrastructure primed the city to become a primary producer of one of the newest iPhone’s most advanced components.

The path to prosperity is neither obvious nor uniform.

These growing cities show that the path to prosperity is neither obvious nor uniform. They leaned on their existing advantages but, in doing so, strengthened their unique capabilities and know-how. Other places can take note. In regions that have suffered stagnation and brain drain since the recession, attempting to chase job growth and tax revenue by replicating other cities’ industrial clusters or by targeting narrowly defined advanced industries is a recipe for misplaced effort and resources. By understanding the nuance and trajectory of a city’s unique industrial structure, leaders can chart a course to shared prosperity and inclusive economic growth.

This premise—that regional leaders can benefit from tools that empower them to make strategic decisions—motivates the efforts of the Workforce of the Future initiative at Brookings. Following our 2019 report on the industrial evolution of regions across the country, “Growing cities that work for all,” the initiative turned its attention to making the results digestible and actionable for regional leaders across the country. The visualization, A Roadmap for Growing Good Jobs, represents the first milestone in that effort.

Our findings reinforce that a “capabilities-based approach” would bolster regional economic development. Capabilities are the hard-to-measure qualities of a city that allow industries to appear and thrive in a given location. They include everything from infrastructure to talent and institutions. Cities, working in partnership with firms and community stakeholders, can more successfully build, retain, and develop industries when they build the underlying capabilities that firms require, rather than indiscriminately attempting to lure companies through tax breaks and incentives.

Examining the industrial structure of more than 900 metro and micropolitan areas spanning diverse regions, cultures, and priorities across the United States produced data insights that can inform strategies for regional economic development. Sophisticated cities may choose to double down on complex industries to accelerate growth, while midsize cities may choose to diversify their economies and expand their capability set. All cities may want to grow good jobs that provide stepping stones for their workforce. In each case, regional planners need to consider their existing economic structure.

The visualization shows three strategies. For 25 selected cities, each strategy will yield a different set of priority industries.

1. Build advanced industries to encourage job growth. The most advanced metropolitan areas, such as New York, San Francisco, or Seattle, host the most complex industries demanding the most sophisticated capabilities. They will continue to innovate, inventing new products and services the world has yet to see. In regions such as these, city planners can best usher future growth by directing their efforts and resources to build the capabilities demanded by the most advanced and complex industries.
2. Diversify for resilient growth. Regions with middle and low levels of economic complexity grow by diversifying into increasingly complex sectors. Understanding this path-dependence of regional industrial development can arm policymakers with valuable information, thereby allowing them to chart their own unique course to shared prosperity. Using their limited resources to make concerted and strategic efforts toward feasible industries can allow cities to bend their economic trajectory toward resilient growth.
3. Target high job quality industries to deliberately foster inclusive growth. No matter the state of a regional economy, fostering good jobs is high among regional priorities. But how can local leaders identify industries that have job quality, are feasible, and upgrade the city’s complexity? By identifying the industries that provide decent pay and benefits to workers without a bachelor’s degree and overlaying information about that industry’s feasibility for a given place, our methods aim to provide regional planners with the tools they need to offer good jobs to their workforce.

This list of priorities is by no means exhaustive. Cities can adapt this underlying methodology to pursue other goals, such as prioritizing green industries or creating occupations that absorb displaced workers.

By understanding the nuance and trajectory of a city’s unique industrial structure, leaders can chart a course to shared prosperity and inclusive economic growth.

As regions pursue all or any of the three strategies, their efforts should also focus on helping workers transition to fill and thrive in growing jobs. Our research confirms that talent is king among the capabilities industries require to be competitive, and concentrated local talent can give places a competitive edge.

Many regions sit on a pool of untapped potential. They can channel the latent talent of unemployed and underemployed workers by understanding career pathways and offering targeted reskilling, rather than letting workers backslide into low-wage jobs. Those that align workforce and economic development in a virtuous cycle can reap the benefits of a people-centered, place-based, economic growth policy.

The data visualization, A Roadmap for Growing Good Jobs, was published by The Washington Post Brand Studio, in collaboration with the Mastercard Center for Inclusive Growth, which provides support for this research.