Skip to comments.What Employers Want From Cities; What Factors Do Companies Consider When They Relocate?
Posted on 07/10/2018 10:48:36 AM PDT by SeekAndFind
There are various dueling popular narratives about what drives economic growth in a city or region. One narrative focuses on business climate factors such as taxes and regulation. Others stress the importance of locally available talent or affordable housing and commercial property. But the reality is that economic growth is multi-factorial. Theres no single component that drives every outcome. Places have to pay attention to many things, not just one.
Consider, for example, the recent announcement that the investment management firm AllianceBernstein will relocate its headquarters and more than 1,000 jobs from New York City to Nashville. If talent were the deciding factor in where to locate that business, the idea of leaving New York City would be unthinkable. New York has the best finance talent in the country.
But AllianceBernsteins move to Nashville is part of a larger trend of finance jobs leaving New York City for lower cost locations. Deutsche Bank opened an office in Jacksonville, Fla., where it now employs 2,200 people. Goldman Sachs employs more than 2,300 people in Salt Lake City. This has been bad news not only for New York but also for its region. Traditionally, finance businesses leaving Manhattan moved across the river to places like Jersey City, N.J., or somewhere in Connecticut. Today, theyre just as likely to move across the country.
Cost savings is definitely a big part of the agenda in these moves, but its not the entire story. Some AllianceBernstein functions, such as wealth management and trading, will remain in New York. And overall, New York City continues to do very well economically, with the city at an all-time employment high. For the highest-end functions in specific sectors that heavily leverage New Yorks unique human capital base, the talent factor still seems to loom large.
Its also the case that having a good business climate doesnt guarantee that your city will thrive. Nashville is booming, but Memphis, which benefits from the same business-friendly state policies, has not posted nearly the growth numbers. Indeed, we often find that within a state different regions can have strikingly different growth rates despite facing identical state tax and regulatory climates.
Like business climate and talent, crime rates are sometimes touted as a driver -- or inhibitor -- of new growth. Yet Nashvilles murder rate is four and a half times as high as New York Citys. Perhaps crime today is perceived as low enough in most places. Or perhaps crime is now even more racially segregated: Chicagos gentrifying neighborhoods are far safer than its economically struggling ones. In city after city, the upscale residents of favored urban districts now face far lower exposure to violent crime than in decades past.
Economic growth, then, appears to spring from an amalgam of factors. Talent, wherever it can be found, really is of great importance. If you dont have or cant get the labor force to meet the demands of business, its going to be tough to grow your jobs base. And if other places have or can get the same talent -- or perhaps easily convince your talent to move there -- and have other advantages over you in terms of costs and business climate, then the talent you have may not save you.
Theres another troubling labor factor: Many places have shrinking labor forces, or will have them soon. This means its not very likely they will be able to grow their economies significantly no matter how favorable their tax climate. While its possible for them to become higher-value economies while shrinking in jobs, thats not likely either. For some places, their struggles to attract people may be in part related to high taxes or onerous professional licensing and other regulations. In others, quality-of-life issues like crime may loom larger. Or perhaps problems like a bad brand in the market lag behind the reality of positive changes.
Much of the Rust Belt falls into this category. Many cities and rural areas are shrinking or stagnant in population. A number of them have job openings going unfilled, but these jobs are not good enough to lure people to the community. Some places are actually turning to economic subsidies to lure residents, not just businesses. Without some major change in their demographics, they may be essentially capped out economically.
Places that do have growing labor forces with in-demand skills still need to pay attention to their cost profile, taxes and regulatory climate. The most elite cities can perhaps get away with not doing so, for a while at least. But as they become more dependent on the highest-end businesses to pay the civic bills, they will become more exposed to fragility in those sectors.
Beyond talent and taxes, places also need to pay attention to a variety of other factors including public services, racial inclusion and their distinctiveness in the market. And even considering all this, it can be difficult to pin down exactly why one place is growing faster than another. It would be nice if cities and states could rely on simply pulling one lever for economic growth, but in the game of economic development there is no simple rule.
A meandering article which says very little, while at the same time not mentioning several important factors at all.
This seems right in line with Freud’s classic question: “What do women want?”
Answer: Who knows???
Memphis is a crime-ridden sheethole. My son’s friend got there in May and has already been mugged
Today, CNBC awarded it’s 2018 Best State for Business to Texas. It’s the umpteenth time the state has won this annual award. Of course, being the Mean Media, they had to quickly tell everyone that Texas has low marks in education
but didn’t mention that as a border state, Texas educates thousands of kids from Central America and Mexico who are illiterate in two languages.
No mention of the amazing recovery Texas made from the worst hurricane/flooding in modern history and the tremendous spirit of the people who made that possible. And no mention of our conservative state government that has to fight off the socialist advances in our urban areas to keep businesss rolling and providing thousands of new jobs.
In no particular order:
1. Can I serve my customrers from that location.
2. Regulatory climate and rule of law
3. Infrastrucutre - can I house my business and move people, supplies and commodities and product.
4. Is it a place that my employees will want to live and can afford to live.
5. Can I get the expertise needed for my business [direct hires, contractor, consultant and technical support.
One of the major factors for Toyota’s move to Texas was housing prices.
Despite the fact that Texas has the most high schools with a 100% graduation rate and one of the highest overall graduation rates in the country.
It amazes me that they did not include housing prices as a factor.
Oh, we know. The percentage of Blacks is inversely correlated to job moves.
Maybe I am cynical but based of my experience I would say
1. Does the new CEO live there or want to live there
2. Does the new CEO’s wife want to live there
Two major reorg/buyouts/senior management changes in two different companies in the last 15 years and those two items drove the decision as to where the headquarters were each time. Cost/crime/infrastructure was immaterial.
What do employers want from cities? Relief from taxes and regs. And lots of taxpayer cash. Guess which they’ll get.
In my neck of the woods it’s less about housing prices than skyrocketing property taxes.
What "favors" those districts? Magic dirt?
Or is it that the inhabitants of those districts are law-abiding?
I say those "non-favored" districts with high rates of violent crime should heed Sheriff Clarke.
Wow he really said that?
Far too few ever say such things. The fear of political correctness often keeps people from making such observations.
NYS. Upstate. Only biz getting bribes...er, taxpayer incentives, cite up here.
Site up here....
Pittsburgh City Government seems to think the secret is
building bike paths and becoming the Gayest Friendliest City on the Planet.
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