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