06-B PEDC Budget 2007-2008 - Laserfiche WebLink

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Lamar County - Paris Economic Development Plan Guiding Principle 3: Encourag:in!! "Hi!!her Quality" Jobs-Jobs With Hi!!her Wa!!e Premiums. More On-the-Job- Trainin2. Greater Advancement Opportunities-Has Sienificant Labor Market Benefits for Local Residents. Economic research shows that different industries pay quite different wages, often differing by 15 percent or more, for workers with similar education, age, and other characteristics. Within a given industry, different fIrms pay different wages-Qften differing by ten percent--controlling for worker characteristics. Firms also differ greatly in their policies towards worker training, and innovative workplace practices such as work teams, quality circles, and total quality management. A local area can improve economic opportunities for its workers by shifting the local mix of fIrms and industries toward those offering better wages, working conditions, and opportunities for advancement. The local mix could be shifted toward higher quality jobs by formulating economic development policies for such fIrms. Support for worker training, to be discussed further below, might also encourage fIrms to offer higher quality jobs. In addition to increasing wages and improving working conditions, better quality jobs encourage increased labor force participation. For example, in several studies, Bartik fInds that a shift in a metropolitan area's industrial mix toward a mix with a one percent greater average "wage premium" increased the average annual hours worked per person by over one. Guiding Principle 4: Local Economic Development Or2anizations Should Consider How to Increase the Modest Proportion of New Local Jobs That Go to Local Residents. Particularly Disadvanta2ed Local Residents. Local public offIcials are generally unaware how large a proportion of new jobs go to in-migrants rather than the original local residents. Empirical research on how local employment growth affects migration suggests that in the short-run (less than fIve years), 30 to 50 percent of new jobs go to in- migrants; in the long-run (more than fIve years), 60 to 90 percent of new jobs go to in-migrants. Is it legitimate for local public offIcials to be concerned about whether new jobs benefIt their original constituents versus in-migrants? Because the original residents pay much of the costs of economic development programs, they might legitimately demand that policies seek to increase their benefIts. In addition, there are benefIts to providing jobs in local economies for which people have a strong "sense of place." Studies indicate that people are, on average, willing to give up 10 to 20 percent of their income to remain in their original local area. Finally, as discussed below, there may be some fIscal benefIts to avoiding the public service costs of more in-migration. It is not simple to tell the relative benefIts for in-migrants and the original residents from a particular economic development policy or project. For example, suppose that some economic development deal encourages a branch plant to relocate into a metropolitan area. Suppose further that the relocated plant brings along with it all of its existing workers; this is particularly plausible if the plant pays high wages. Such a plant will still provide some benefIts for local workers. First, the relocated plant will have some multiplier effects, which will expand employment opportunities for local residents in local suppliers and retailers. These multiplier effects will be particularly large because of the plant's high wages. Second, even if the relocated plant's workers originally came along with the plant, there will be some turnover over time, opening up job vacancies for the original residents. The employment benefIts from this relocated plant may be lower than average, but they will not be zero. Simply requiring new businesses to do local hiring might discourage new business locations. This concern explains why aggressive city policies to push local hiring, such as Portland's JobNet program, are the exception rather than the rule. Programs that make local hiring more attractive, through customized training, may be more feasible. Paris Economic Development Corporation Page 45