Setting the stage for talent-driven economic development

Talent-driven economic development is the future (and largely the present) of effective economic development efforts. How should economic development organizations (EDOs) respond?

A recent Brookings Metro report by Joseph Parilla and Sifan Liu offers some answers, including practical examples of how EDOs—in partnership with employers and the education and training system—are changing policy and practice to achieve better outcomes for people, businesses, and communities. The report is a must-read for economic development leaders focused on positioning their localities, regions, and states for a healthy economic future.

The rise of talent

There is ample evidence that talent considerations have come to dominate the site-selection criteria of traded-sector firms as they choose where to place job-creating business investments. Area Development’s annual survey of U.S. corporate real estate executives illustrates the shift. In 2008, executives ranked “availability of skilled labor” as the sixth most important site-selection factor. In 2018, they ranked it number one—an indication that talent development can help position regional economies for growth.

However, as Brookings notes, EDOs generally have not yet retooled their programs and staffing to place a central focus on talent. Obstacles include a lack of staff expertise in talent development and/or talent deployment, inertia, and resource constraints.

A fundamental challenge is that public and private funders of EDOs still largely evaluate their effectiveness using short-term measures of success—principally, the amount of new jobs and capital investment associated with project announcements. This emphasis often runs counter to a focus on talent-driven economic development.

Without abandoning traditional measures of success, funders of EDOs should also prioritize advocacy or implementation of initiatives that improve economic competitiveness and build sustainable competitive advantages. These include talent-driven economic development efforts (e.g., targeted education and training programs, customized workforce solutions, talent intelligence), industry sector cultivation, placemaking, or international trade development. Brookings’s Amy Liu has forcefully made the case for this shift.

In search of a new model

There is no widely embraced, proven, systemic model in the U.S. to effectively respond to the talent needs of business while enabling individuals—especially working adults without a college degree—to navigate the complex connections between education and the labor market. Likewise, few regional or state EDOs have established a robust model for engaging in talent-driven economic development.

Brookings joins others, such as the Strada Institute for the Future of Work, in making the case for a new learning/earning ecosystem that would enable students, job seekers, employers, and policymakers to better navigate the labor market—in part by launching or refining assessment, learning, advising/coaching, financing, and credentialing programs to support diverse pathways to good jobs.

In addition to Brookings and Strada, an impressive array of organizations is working on various elements of the learning/earning ecosystem, including Burning Glass Technologies, Emsi, the Bill & Melinda Gates Foundation, Google, Harvard Business School, JFF, LinkedIn, the Lumina Foundation, University Ventures, the U.S. Chamber of Commerce, and more. With this much horsepower focused on crafting policy, programmatic, technology, and entrepreneurial solutions, big advances are likely in the next five to 10 years—especially if EDOs encourage adoption of promising solutions.

For most EDOs—in particular those serving a locality or region—talent-driven economic development will mean proactive engagement in generating insights on gaps between talent supply and demand, facilitation of connections between employers and educators, and advocacy for policy or programmatic initiatives associated with talent development, deployment, or attraction. Few local or regional EDOs have the resources to effectively deliver large-scale talent development, deployment, or attraction programs themselves—although some regional EDOs (e.g., the Greater MSP Partnership) have found that businesses will readily provide funding support for targeted talent initiatives.

Moving toward talent-driven economic development in Virginia

Recently recognized by CNBC as America’s top-ranked state in both education and workforce, Virginia has taken several big steps toward implementing the framework for action articulated in the Brookings report, thanks in large part to the support of state executive and legislative branch leaders. Here are a few examples:

One simple step that all states can take is to ensure that economic development leaders have a seat at the table in important governing bodies concerned with education and/or workforce development. For example, as CEO of the Virginia Economic Development Partnership (VEDP, the state economic development authority for the commonwealth of Virginia), I am an ex-officio member of Virginia’s higher education coordinating board, the State Council of Higher Education for Virginia (SCHEV).

Thanks in large part to that SCHEV connection and the relationships it sparked, VEDP and SCHEV were well positioned during the first round of the Amazon HQ2 competition to collaboratively design an unprecedented $1.1 billion, performance-based Tech Talent Investment Program that became the centerpiece of Virginia’s successful bid. Through the program, more than a dozen higher education institutions will collectively produce 31,000 graduates in computer science and related fields. Hundreds of tech employers across Virginia will benefit, including but not limited to Amazon. Virginia’s novel, talent-driven approach to its HQ2 bid stood in contrast to the emphasis on cash and tax incentives that many competing proposals offered.

In 2016, the Virginia Community College System (VCCS) launched FastForward, a first-of-its-kind, performance-based funding model to support short-term training programs in high-demand industries. FastForward has resulted in 18,000 industry credentials, leading students to increased wages while lowering on-the-job training costs to employers. Demand continues to outpace supply.

More recently, VEDP has collaborated with VCCS and other higher education partners to launch the Virginia Talent Accelerator Program (modeled largely on the acclaimed Georgia Quick Start and Louisiana FastStart programs), which will provide world-class, turnkey, customized workforce recruitment and training solutions as a service-based incentive for competitive, traded-sector economic development projects that offer quality jobs.

Affirming the Brookings report’s endorsement of custom training programs, the availability of the Virginia Talent Accelerator Program already helped state and local partners secure a 700-job delivery van assembly facility in largely rural southern Virginia.

Talent-driven economic development: A big opportunity for regions and states

While the Brookings report includes several thoughtful suggestions for how EDOs can engage in talent development and deployment, its most important message is simply that they should do so. Likewise, the funders and governing boards of local, regional, and state EDOs should place more attention on talent-driven economic development initiatives, not just traditional business attraction activities measured by announced jobs and capital investment.

The Brookings report highlights promising organizations and initiatives across the country that are tackling discrete elements of a comprehensive ecosystem for talent development and deployment, but no state or region has yet established itself as a national leader for human capital development overall. In the years to come, the states and regions that do so will likely also lead the nation in economic growth and social mobility.