13th annual Municipal Finance Conference


13th annual Municipal Finance Conference


In rural Alabama, a test for talent-driven economic development

Tuscaloosa, Alabama - February 8, 2020: University of Alabama building

The 60 finalists for the Economic Development Administration’s (EDA) Build Back Better Regional Challenge (BBBRC) represent a new source of insights around inclusive economic development. In this new era of federal support for place-based industrial strategy, the BBBRC is one of the first occasions in which state and local actors are equally prioritizing economic growth and equity.

This piece highlights one notable BBBRC finalist: Driving Regional Innovation through Vehicle Electrification (DRIVE). Submitted by a University of Alabama-led coalition, DRIVE sets out big goals, including revitalizing Alabama’s rural communities, providing pathways to good jobs, and supporting a vibrant electric vehicle manufacturing ecosystem. And it stands out for emphasizing education and training as crucial means to reach those goals.

The DRIVE coalition illustrates a broader shift toward talent-driven economic development

Regional and state economic development approaches have historically played a limited role in education and workforce development. Rarely do economic development strategies directly involve the K-12 education system or engage with talent development partners to prepare people without college degrees for well-paying jobs that require specialized skills. This is a striking disconnect because workforce quality is paramount to core economic development interests such as business attraction, retention, and growth. Roughly 95% of executives rate the availability of skilled labor as “very important” or “important” to their investment location decisions.

However, states and localities are now increasingly recognizing that an economic strategy based primarily on business attraction with tax incentives, plentiful land, and a business-friendly regulatory environment is not sufficient without a strong talent base. In Alabama, the state has long provided customized training and recruitment for major employers through a state agency and supported partnerships between large manufacturers and high schools to offer apprenticeships. But these strategies’ lack of scale means they miss many employers and workers.

Alabama’s job training programs have been part of a broader economic development strategy focused on attracting large global manufacturing companies. This strategy, shared by other southern states, has argued that industries such as automotive and aerospace manufacturing can benefit from the region’s low cost of living, generous tax incentives, and largely non-unionized workforce, especially relative to locations in the industrial Midwest. But this strategy often sees diminishing returns, as those big bets on large companies only pay off if a state can develop a larger cluster of upstream and downstream suppliers to support them, including the development of locally owned businesses. To support existing businesses and entrepreneurs—and thus enable more inclusive growth from within—talent development strategies need to be more comprehensive.

The DRIVE coalition illustrates this evolution to broader, multisystem talent development strategies. Led by the University of Alabama’s Education Policy Center, the coalition also includes West AlabamaWorks (the regional workforce development board); multiple school districts and community colleges, including Shelton State Community College; the Tuscaloosa County Economic Development Authority; and the University of Alabama College of Engineering. Out of a pool of 529 applications, DRIVE was one of 60 finalists to receive a $500,000 planning grant. And although the EDA did not select DRIVE as one of the 21 proposals to receive implementation funding, the agency is supporting all finalists in an ongoing community of practice to increase their capacity for future work—a signal that it considers these proposals solid and worthy of refinement, even if they didn’t make it to the next stage.

DRIVE focuses on the largely rural “wider West Alabama” region and builds on its education and industrial assets. The 27-county region includes two flagship public universities and numerous other four- and two-year colleges (including historically Black colleges and universities). The auto manufacturing cluster there is made up of two manufacturing plants (from Mercedes-Benz and Hyundai) and their network of over 40 suppliers. DRIVE’s focus on electric vehicle manufacturing is a direct response to current trends: Manufacturers, state government, and the University of Alabama at Tuscaloosa are all investing to prepare for greater adoption and sales of electric vehicles.

As wider West Alabama’s major industry faces an inflection point, the region is also contending with other economic and social challenges. Its geographic footprint includes the Black Belt, named after the area’s dark soil and shaped by a legacy of slavery and Jim Crow laws. The area includes majority-Black counties with persistently high poverty, low educational attainment, high unemployment, and relatively low levels of economic activity. Parts of the area are extremely rural, bringing challenges such as a lack of transportation and infrastructure.

DRIVE takes a direct approach to enhancing education and employment

DRIVE focuses on the long game and aims to improve foundational socioeconomic measures in the region: reducing the high school dropout rate, increasing college enrollment among recent high school graduates, and increasing the labor force participation rate. The coalition is aiming for population-level changes rather than limiting itself to particular schools or programs. This is not a common economic development approach, but given that workforce skills and capabilities are perhaps the most important drivers of regional growth, the educational goals are logical, if harder to attain. Increasing the labor force participation rate (the share of people working or looking for work) is equally central to increasing earnings in the region. These goals also align closely with state education and workforce priorities that Governor Kay Ivey has articulated since she was elected in 2017.

With nearly $60 million in proposed investments in education, training, and resident supports, the DRIVE proposal directly adds capacity to education, training, and college advising. It is deeply informed by the local labor market and employer needs, but it does not take a narrow view of preparing people for jobs in electric vehicle manufacturing. The plan includes industry-specific elements, but also focuses on key educational transition points more broadly by preparing students for college and careers, developing student pathways to good jobs, and expanding access to hands-on technical training in rural areas.

Preparing K-12 students for college and careers

If fully funded, DRIVE would support the expansion of the Modern Manufacturing program to more than 20 additional sites throughout the region by providing funds to hire and train new instructors. Currently in place at six high schools in the region in partnership with Mercedes-Benz, the program is geared toward auto manufacturing. Students can earn industry-recognized credentials as well as college credit or an associate degree through dual enrollment, and graduates are prepared to enter apprenticeships or directly enroll in college.

DRIVE would also revive the Alabama College Advising Corps and expand the KickStart College and Careers programs to conduct extensive outreach and provide guidance to middle and high school students. These programs would provide near-peer college counseling and financial aid awareness to all 8th and 11th graders in the region, help them develop individual College and Career Success Plans, and increase the share of seniors completing Free Application for Federal Student Aid (FAFSA) forms. They would also bring these students to the University of Alabama and auto manufacturing plants for tours.

Developing student pathways to good jobs that do not require a bachelor’s degree

DRIVE would expand the Educator Workforce Academy (EWA) to additional counties and school districts. Operated by coalition member West AlabamaWorks, the EWA is a yearlong program for principals, counselors, and teachers to learn about area employers, apprenticeships, two-year college programs, and other training opportunities. The goal is to ensure that educators gain a better understanding of the local labor market in order to advise students on the multiple pathways they can take after high school that can lead to good jobs.

All the proposal’s educational elements benefit from and build upon recent state activity. With the University of Alabama Education Policy Center’s assistance, the state created and updated information management systems that support registered apprenticeships and ensure that college credits earned at community colleges—including those earned by high school students in dual enrollment programs—are transferable to public universities. State data systems rarely take center stage in policy discussions, but they provide central (if often invisible) support for core system goals. One of the dangers of competitive grants is that applicants can develop new programs in isolation without fully leveraging or connecting to the local landscape. That is not the case here, where proposed grant activities would layer on top of recent system improvements.

Expanding access to hands-on technical training in rural areas

Another DRIVE component is the Smart and Connected Rural Manufacturing program (SCRM), which would use augmented and virtual reality technology to spread training opportunities throughout the region—especially important in rural, sparsely populated areas. Administered by the Alabama Initiative on Manufacturing Development and Education (IMaDE) at the University of Alabama’s College of Engineering, SCRM would create strategically located hubs that combine in-person and virtual training for electric-vehicle-specific manufacturing processes. In collaboration with community colleges, regional public universities, and employers, SCRM would offer a series of industry-driven modular courses to provide applied learning opportunities via simulated equipment in virtual environments.

Both the high school and virtual reality manufacturing programs use a sector strategy—a workforce development model backed by strong evidence of effectiveness. The proposal shows a deep knowledge of local industry workforce needs and strong employer partnerships, which are critical ingredients of successful sector programs.

Sustainability remains a central question

One of the downsides of competitive grants is the time-limited nature of their funding. Staff supported by grant money may be let go when the grant expires, and programs can fall apart. The DRIVE proposal addresses this in a few ways.

First, it would create a Black Belt Leadership Academy to help county and municipal leaders access federal resources. Many local rural governments simply don’t have the staff, funding, or administrative capacity to apply for and manage federal grants—thus missing out on the opportunity to address critical issues such as housing, broadband, infrastructure, and more. The Black Belt Leadership Academy would focus on federal agencies that the region’s leaders interact with the most: the Delta Regional Authority, the Department of Agriculture’s rural division, and the Economic Development Administration. While it is no guarantee that participants would win federal grants, increasing local capacity to access these funds is a smart step.

Second, to increase the likelihood of future state funding, the DRIVE coalition aligned their proposal with existing state priorities in education, workforce, and economic development as much as possible. They aimed to show clear evidence of effectiveness, thereby making the case for future investments from the public, philanthropic, and corporate sectors. They cultivated broad multisector support, with a long list of letters of support from state and local leaders, school districts, employers, workforce entities, and postsecondary institutions. These leaders will be critical to supporting DRIVE’s programs after the grant ends, and their support at the proposal stage is critical—but still no guarantee of future actions.

Finally, the coalition plans to stay together and jointly seek additional funding, and partners have signed a memorandum of understanding to that effect. Other Biden administration initiatives—such as the National Science Foundation’s Regional Innovation Engines and the Department of Commerce’s Tech Hubs and Recompete Pilot Programs—follow a similar formula as the BBBRC and offer new funding opportunities. The DRIVE coalition leaders acknowledged that not being selected for a BBBRC implementation grant gave some critical partners pause about going after another highly competitive challenge program given the tremendous effort involved. But they appreciated the benefits of having an investment-ready strategy that’s already been vetted by a federal agency.

Developing new measures of success for economic development

Thanks in part to place-based challenge grants that broaden the definition of regional economic performance, the field of economic development is increasingly recognizing that it needs to change its ways. Using federal investments to stimulate regional innovation and growth from within is a more sustainable model than zero-sum business attraction approaches that simply move jobs around the country. And measuring success by short-term goals around job growth and increased capital investment will not cut it when human capital plays such a key role in regional economic well-being.

But even as the field is evolving toward greater engagement with education and workforce systems, the DRIVE proposal stands out for its willingness to engage with “wicked problems” such as low high school graduation rates and weak connections with the labor market—issues that are crucial to achieving inclusive prosperity. Time will tell if this approach is a blip or a trend.

This report was prepared by Brookings Metro using federal funds under award ED22HDQ3070081 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.