Toward a More Inclusive and Resilient Economic Development Paradigm

The economic development field has never faced bigger challenges—or higher stakes. With the coronavirus pandemic still raging out of control, unemployment remains stubbornly high, local governments are rapidly running out of money and small businesses are closing in droves. Meanwhile, our hyper-polarized political climate, renewed awareness of racial inequality and the increasingly frequent and severe wildfires, hurricanes, storms and other natural disasters are heightening tensions across society. America’s deep inequities and vulnerabilities are as raw and exposed as they’ve ever been.

As business activity resumes, we can no longer push these problems under the rug while debating or denying their existence. Our communities, our way of life and our economy are being reshaped by these forces, whether we like it or not. The most obvious and immediate changes we are experiencing stem from the rise of remote work and the shifting economic geography it is creating: some people will be drawn to rural and suburban areas for more private space, while others will be more attracted to central cities, which are all of a sudden more affordable. The question now is whether community and business leaders can leverage these changes for resilient and inclusive growth. For too long, the word “resilience” has been used solely in the context of environmental disasters or unnatural catastrophes, like terrorism or toxic oil spills. But resilience needs to be considered more expansively, as a place’s capacity to weather economic and public health threats and even more broadly, “as the capacity of residents, communities, institutions, businesses and systems to survive, adapt and grow,” no matter what kinds of chronic stresses and acute shocks they experience.

The more resilience a community has, the less likely it is to break under pressure—and the faster and more completely it can rebound from crisis. Achieving a more resilient and equitable future won’t be easy, but there are strategies and actions that economic development leaders can adopt that will set that process in motion. Among these new “plays”:

Expand cooperation among government jurisdictions, businesses and community organizations. As economic geographies are reshuffled, cities in affected regions will need to more closely align their provision of services, including transportation, education and health care. Public-private relationships that developed during the pandemic to provide testing and PPE can be strengthened and redirected toward other goals, including workforce development, traffic demand management and other public health initiatives. Anchor institutions like hospitals and universities can expand their leadership by partnering with governments, local businesses and community groups to fulfill regional economic and social needs. Successful collaborations shouldn’t end once a vaccine becomes widely available.

Rethink the role of commercial and entertainment districts. With many companies saying they will be leasing less office space in the future and lingering anxiety about public transit and large public gathering places, the neighborhoods where these activities take place will need to diversify their offerings. Encouraging mixed-use development in downtown office cores, satellite office parks and entertainment districts will help keep these neighborhoods vibrant even if their core functions are diminished. Zoning restrictions could be loosened and financial incentives provided for residential conversions. Economic development officials should also consider diversifying the business clusters that exist in their cities, so that if one sector is particularly hard-hit, the whole regional economy will not be devastated.

Foster resilience through economic inclusion and diversification. Small businesses in particular need extra help during this uncertain time. Too often, city regulations hamper small businesses through onerous permitting processes; many cities are beginning to strip those processes away. Governments, anchor institutions and large businesses can also develop targeted investment programs to help historically marginalized and underserved businesses, similar to anchor collaboratives and local purchasing programs. While business attraction is always important, economic development officials also need to look at ways to retain and expand existing businesses. This can be done through the framework of collaboration and partnership described above.

Invest in the skills of all residents. Cities need to align economic development and workforce priorities, creating new pipelines of workers into strategic, talent-hungry sectors. Job training and workforce development should leverage the latest technologies to ensure workers are being trained for the jobs of the future. Likewise, these programs should provide wraparound services, including childcare and mentoring, all in the same location, to make it easier for the people who need them the most to take full advantage of them.

Support essential workers to address inequities. While they’ve always been essential, it’s now clear to everyone just how important “essential workers” are to the functioning of society. These workers need to be treated with dignity and supported so they can bring their best to the job. Safety nets like paid sick leave, living wages and childcare will help fill labor shortages and improve worker performance, as well as serving as social wellbeing indicators. Cities, businesses and anchor institutions should consider the “good jobs strategy” developed by Zeynep Ton at MIT and pursued by successful companies like H-E-B, Costco and Trader Joes, in which low-paid service jobs are transformed into viable careers to the benefit of both employees and employers.

Increase health care investments for economic development. As the pandemic has demonstrated, health care is a vital form of economic development. Cities and states should accept federal dollars for Medicaid expansion and invest them in new clinics and health care jobs. Health care facilities and systems will likely need to change a great deal to accommodate tele-health and other post-pandemic realities, so investments in infrastructure and IT will be essential. There will be major opportunities for the companies—and regions—that invest in these technologies. There will also be many more job opportunities in the health care field, meaning job-training and workforce development initiatives should target their efforts in that direction.

Promote growth in smaller and rural communities. A select few rural communities and small towns have become magnets for remote workers, causing the problems that come along with prosperity, like rapidly rising housing prices and strains on local services. However, far more rural communities and small towns have weak economies with few prospects for growth. A broader, more regional focus would help these communities establish better infrastructure and educational, economic and health care links to nearby cities and towns. Regions should plan for export sectors that could suit rural areas that have cheap, abundant land and develop talent initiatives that encourage young people who’ve sought opportunity elsewhere to return home.

Invest in equitable placemaking centered on well-being. The pandemic is transforming our public spaces. Many of the temporary changes cities have adopted, including outdoor dining and shared streets, should be made permanent. Streets (and neighbors) can adapt more quickly and seamlessly than previously imagined, so cities should be bold about prioritizing the most enjoyable, environmentally friendly, healthy and economically vibrant uses for public space. These spaces are essential for bridging differences across society, celebrating different cultures and communities and bringing diverse groups together as one. The economic challenges posed by the pandemic also highlight the need to keep cities affordable for the working class. Community land trusts and land banks are another creative way that cities can increase public space in the name of affordability and equity.

As important and urgent as it is for local leaders to get our communities up and running again, the ultimate challenge is to make them stronger, more resilient and more equitable than they have been in the past. Covid-19 and other recent events have exposed our existing weaknesses and blind spots, but they also point us to a better way forward. Economic development leaders now have an incredible opportunity to make their cities and regions more resilient in the face of future shocks. Cities that don’t act now will be left behind—not if, but when the next crisis strikes.

This piece was first published in "Resiliency in the Age of COVID-19: A Policy Toolkit," a report by the LBJ School. It is republished here with permission.