Economic and workforce development are two of the leading priorities for policymakers at the local level, but they are notoriously difficult to get right. The cities and regions that do find success in generating both economic growth and an upwardly mobile workforce typically achieve this success by building on their local capabilities. These capabilities may include a specialized workforce, unique geographic amenities, legacy industries that serve as the foundation for new business attraction, or other local advantages. But in practice, identifying the capabilities that should be targeted as building blocks for local growth can be a challenge, as can understanding the trade-offs that arise when prioritizing certain choices over others.
The Workforce of the Future initiative’s new Smart Growth Cities tool tackles these challenges via an interactive guide for economic and workforce planning at the U.S. Metropolitan Statistical Area (MSA) and Economic Development District (EDD) levels. The tool first uncovers the industry strategies that are most feasible for each of these areas; in other words, the strategies that best leverage an area’s underlying capabilities. Next, the tool allows planners to explore the trade-offs that are implied by each industry strategy in terms of economic growth, good job creation, and equitable job creation. And finally, a workforce plan for meeting the strategy is presented. The resulting industry and workforce plans can then be saved and shared with colleagues.
Insights from industry feasibility
The notion of industry “feasibility” is central to the process of guiding users toward the best strategy. As noted, a region’s underlying capabilities determine how feasible a given industry strategy will be. And while the entire range of local capabilities would be difficult to identify and measure, they can be inferred from historical production patterns and summarized in a feasibility measure using methods introduced by Hidalgo and Hausmann (2009) at Harvard’s Center for International Development. In short, the tool calculates the feasibility of every industry for each location by noting that if two industries historically tend to locate in the same areas then they must require similar local capabilities. Extending this idea to all combinations of industry pairs allows us to use a location’s existing industry base to generate a measure of the likelihood that any industry will be successful in that area.
It turns out that this insight is a powerful one, as this feasibility measure is highly predictive of the industries that will thrive in a location. Across all MSAs and industries, total future job creation is highly, positively correlated with an industry’s initial feasibility. Comparing the least feasible industry with the most feasible industry over a five-year period, around 90 more jobs are created in the most feasible industry. We can also focus more narrowly on “new” industries—those with low initial presence that planners might want to direct attention toward. Figure 1 shows that the most feasible new industries subsequently grew more than two percentage points faster than the least feasible ones. As an example, in the Nashville, Tennessee MSA (one of the fastest growing regions from 2015 to 2019), three of the most feasible industries in 2015 were Satellite Telecommunications, Semiconductor Manufacturing, and Support Activities for Rail Transportation. Over the next five years employment growth in these industries averaged over 323 percent.
Linking economic and workforce development
The feasibility of an industry in a region is just the starting point of a strategy, as it simply points the user toward what is possible. Once these possibilities are identified, their feasibility can be weighed against the priorities that local planners have set for the region. For instance, planners can use the tool to search for feasible industries that have a high share of good jobs for workers without a college degree. And with an industry strategy in hand, the tool then allows users to explore the workforce implications of that strategy for their region. Alternatively, a region may already have a detailed industry strategy in mind and could simply use the tool to understand where the region’s current workforce stands relative to what will be required to implement the strategy. Finally, users always have the option to download a custom PDF report that summarizes some of the tool insights for their area.
Every region faces unique challenges while benefiting from unique advantages, which is part of what makes successful economic and workforce development planning so difficult, as there is no one-size-fits-all approach. The Smart Growth Cities tool recognizes this and provides a powerful, location-specific guide that applies research insights and detailed data sources to help planners along this difficult road to achieving economic and workforce outcomes that align with local priorities.
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Acknowledgements and disclosures
The authors would like to thank Marcela Escobari for her instrumental contributions to the research underlying this tool during her time as a senior fellow at Brookings.