Hot U.S. jobs market spurs push to reach those left
behind
Send a link to a friend
[May 09, 2018]
By Howard Schneider
CLEVELAND (Reuters) - In Cleveland, a new
road meant to cut commute times between the suburbs and a downtown
medical hub has been redesigned as an "Opportunity Corridor" to bring
businesses and jobs to poor neighborhoods along its way.
In St. Louis, development officials are repurposing a century-old hat
factory into a space for small manufacturers to bring jobs back
downtown, while Baltimore has committed $500 million to a private-led
overhaul of an old industrial zone.
The efforts reflect a growing consensus among economists and
policymakers that keeping the overall economy on track will not be
enough to help areas left behind by a decade-long recovery.
The current expansion is among the longest ever and brought national
unemployment to an 18-year low. Yet over 6.3 million are still out of
work, many of them clustered in cities with chronic, high unemployment.
A Reuters review of federal data shows that out of those unemployed
about a quarter live in 50 urban counties with above-average
unemployment, and a third in just 100. (Graphic:
https://tmsnrt.rs/2rzJc7R)
Often with large minority populations, those areas include cities like
St. Louis, Cleveland and Baltimore - 20th century industrial powerhouses
hit hard by globalization, demographic changes, and the shift to a
service-based economy.
Amid the tightest labor markets in two decades and labor force growth
the slowest in half a century, local and national officials are turning
to targeted training schemes, new investment incentives, and other
strategies to bring jobs closer to the unemployed.
"We definitely need to be thinking in terms of place as an important
component...Increasing the number of people who are connected to the
economy is fundamental to the maximum employment goal," Atlanta Federal
Reserve bank president Raphael Bostic told Reuters in an interview.
"What counts as success? Is it two million people? Five million people?"
Bostic said, referring to the number of jobless. "We can get to maximum
employment and still have a lot of distress."
PILE OF CASH
While monetary policy works on the national level, the Fed under former
chair Janet Yellen and now under chairman Jerome Powell has been only
gently raising interest rates in part to see if it can help lagging
areas join the recovery.
However, a consensus is building among economists and politicians that
the persistence of unemployment and poverty in certain areas needs to be
addressed with direct, "place-based" policies.
The tax code approved by the Republican congress in December included a
bipartisan-backed measure to support such locally-directed efforts,
granting a capital gains waiver for those who invest in locations
included on a list of distressed census tracts being chosen by state
governors.
Advocates, who include Donald Trump's Council of Economic Advisers Chair
Kevin Hassett and Jared Bernstein, a former Obama administration
adviser, hope it shifts capital from buoyant stock markets and
high-value real estate to blighted rural pockets, struggling suburbs, or
ailing inner city neighborhoods.
"Investors are sitting on a large pile of (unrealized) capital gains,"
said John Lettieri, president of the Economic Innovation Group, a think
tank that sponsored a 2015 paper by Hassett and Bernstein outlining the
idea.
"We think the scale is likely to be measured certainly in the tens of
billions of dollars," Lettieri said about how much of an estimated $1
trillion in unrealized capital gains could make its way to neglected
areas. Such amounts still pale with the scale of the U.S. economy and
critics worry the plan may only reshuffle where the poor and jobless
live by speeding up gentrification in areas already on the upswing.
[to top of second column] |
A road is under construction near a medical complex as part of an
effort to bring jobs to ailing parts of Cleveland, Ohio, U.S.,
February 15, 2018. Picture taken February 15, 2018. To match Insight
USA-ECONOMY/JOBS REUTERS/Howard Schneider
However, while the rules for the program are still under development and its
effects uncertain, several local initiatives are gaining traction even without
federal tax breaks. The Fed's Bostic also noted that dollars invested in
capital-starved areas may have greater impact and return than elsewhere.
That is a point often overlooked in national debate over issues such as tariffs,
or by development authorities who traditionally focus on large, greenfield
projects, say officials at the DeSales Community Development Corp in St. Louis.
The non-profit group is renovating a century-old, 87,000 square foot building in
the Fox Park area that once housed a maker of high-end barber chairs, then a hat
factory that supplied World War II troops. The plan is to bring jobs back to the
area by filling the space with cabinetmakers, small bakers, or similar craft
businesses.
In Baltimore, officials are backing an effort by Under Armour chief executive
Kevin Plank to rebuild the Covington Point industrial area as an integrated
tech, manufacturing and residential hub.
FROM HOUSEKEEPER TO NURSE
In Cleveland, University Hospitals medical complex has responded to labor
shortages by hiring workers from the surrounding high-unemployment neighborhoods
for entry level jobs and training them for higher-level professions, such as
nursing.
Loretta Bey is among more than two hundred local residents who have seized the
opportunity since the program's launch in 2013. The 53-year-old widow lost her
job as an office manager five years ago when her employer, a construction
company, shut down. Bey, who cares for her teenage grandson, started as a
housekeeper, became a nurse's assistant two years later and now is making $16 an
hour while studying for an associate's degree to become a licensed nurse.
Kip Clarke, KeyBank [KEYBKU.UL] market president for Cleveland, says local
business officials hope to replicate those sort of job "pathways" citywide, for
example by linking entry level positions in fast food franchises with training
and follow-on employment at other companies.
City planners, meanwhile, bet that by lowering the speed limit for the 3.2-mile
(5.15 km) "Opportunity Corridor" and adding water, electricity, fiber optic
cable and other utilities along its path, they can offer logistics firms, data
farms and other businesses an alternative to suburban industrial parks. The
project is still under construction, but local agencies have been buying vacant
properties and cleaning up and consolidating land to offer for projects.
Alongside that effort, jobs officials are doing skill "inventories" of local
residents to tailor training programs.
Some have already taken off, including a new office building IBM built for its
Explorys healthcare analytics firm. "It is a micro issue," Clarke said of the
city's employment challenges. "People can get caught up in academic studies of
aggregate unemployment. But you need to dig into the trenches."
(Reporting by Howard Schneider; Editing by David Chance and Tomasz Janowski)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|