UWGNH's Income Investments Align Well with Expert Advice Offered at Governor's Economic Summit

On October 6, 2011, I had an opportunity to attend Governor Malloy's Economic Summit.  The Summit not only left me better equipped with strategic direction on economic development, but illustrated that the United Way of Greater New Haven's (UWGNH's) recent investments in the Income category are well aligned with expert opinion on how best to spur jobs creation. 

Simply put, UWGNH's $100,000 grants to Human Resources of New Britain/Empower Enterprises, LLC and All Our Kin, and reservation of resources to support technical assistance to Episcopal Services of New Haven, the South Central Behavioral Health Network, STRIVE-New Haven and Columbus House, reflect well placed emphasis on two key points.  First, projects must tailor training opportunities to the needs of area employers.  Second, small businesses need new sources of start-up capital and operational support to help them thrive. Both aspects are ably addressed by the grant recipients. 

The Summit, which significantly exceeded its attendance capacity and reflected participation by a broad range of business leaders and stakeholders, was structured to provide context setting in the morning, and interactive workshops (on such topics as business incubation, workforce development, and promotion of a facilitative environment in which to do business) in the afternoon.  I was there for the morning session.

Governor Malloy opened the session by reaffirming his commitment to jobs creation as priority one.  He then referenced the extensive tour that he has undertaken over the course of the year, which has involved contacts with over 350 companies across Connecticut.  Key focus points that emerged in these discussions include support for small business development, efforts to streamline regulatory processes, promotion of innovation and the need for targeted workforce development.

Following the Governor, Steve Cochrane, Managing Director of Moody's Analytics, provided context setting by making some general observations about the economy.  He stated that businesses are on the whole well capitalized and that there is strong productivity.  Businesses would in his opinion be well served by boosting their investment spending (e.g. on equipment, software) to refresh capital stock, and by increasing exports to emerging economies.  This, he noted, is could be of particular benefit to Connecticut, in which exports as a percentage of gross state product have in recent years grown from 5 to 7% but still lag behind the national average of 10%.

Cochrane further noted that the banking industry is in general well capitalized, but that this hasn't translated into availability of capital and credit for small business development.  This is a challenge in that the means of financing of job creation is changing – from a historical reliance by start-ups on home equity and credit cards to need for new capital sources.  Further, he commented that consumers will not, as they did in the past decade through personal spending and home purchases, lead or accelerate the economic recovery.  This is because American households are paying down debt and tightening their purse strings. 

Cochrane also reinforced that there will be increasing need for skilled labor and that it is essential for education policy to support specific indices of need.  Due to demographic shifts and the aging of the U.S. population, health care and the allied professions have emerging growth opportunities.  The grandchildren of the Baby Boomers are starting to enter school, and more teachers will be needed to accommodate them.  In that these children are the next major labor pool, education policy should be reoriented right now to meet the needs of the businesses for which they will work.

Cochrane concluded by commenting that states must diversify the base of their economies and focus on businesses that can produce both spillover and multiplier effects with job creation.  In Connecticut, this will mean expanding beyond financial services and aerospace. 

Cochrane was followed by Mitch Horowitz of Battelle (a firm that advises states on economic development) and Bryan Hancock of McKinsey and Company.  Horowitz shared the following recommendations:

• economic development must focus on “every link in the development chain”, from idea generation through implementation;
• businesses must learn to differentiate themselves in the global economy (e.g. demonstrate what unique value they bring);
• education policy is key to tailoring training programs and advanced degrees to the applied needs of businesses;
• the focus should be upon the types of “clusters” that have been developed in states such as North Carolina – both to maximize opportunities for companies with like purpose and to foster related business.

Cochrane also said that companies would be well served by adopting an “open innovation” model through which it became permissible to acknowledge that not all good ideas will be internally generated and that there is value in partnerships. 

Hancock provided additional context setting as to the particular challenges posed in overcoming this economic downturn.  He indicated that by contrast to other historical periods of recession, recoveries associated with recent downturns have been increasingly jobless and have taken much longer (1.5-2 years as opposed to approximately 6 months).  To both make up for jobs lost (7.1 million) and produce sufficient opportunities for newly emerging workers, we will nationally have to create 21 million jobs; and to do so, businesses must become “high share, high skill, high spark and high speed”.  By this he meant, collaborative, equipped with the right labor, innovative, effective in use of technology, and nimble.

Following them, Michael Porter, Professor of Economics at Harvard, emphasized that to achieve recovery, states need fiscal stability and enhanced competitiveness.  Connecticut has done a good job of moving toward fiscal stability.  However, to enhance competitiveness, Connecticut would benefit from facilitating the environment for business through informed tax policy, investments in R&D, workable labor policies, liberalized regulation and permitting processes, and antitrust enforcement.   Connecticut should also align education policy to the applied needs of businesses and decrease the costs of doing business (e.g. energy, communications).

Next was a panel composed of Susan Herbst (UConn), Bruce Alexander (Yale) and Robert Kennedy (Board of Regents) who gave précis of the work of their schools in re-framing curriculum, developing partnerships with businesses for internships and employment, implementing research incubators, facilitating (mentoring, capitalizing) student-run start-ups (e.g. Yale’s support for the founders of Higher One, which, well known to the United Way community, is now a public company that employs over 200 individuals and is building an expanded space at Science Park in New Haven) and developing research-led spin-off businesses.

Finally, Scott Case, founder of Priceline and now affiliated with the President’s “Startup America” initiative, discussed opportunities for technical assistance and business support, and emphasized that the focus will be on “young companies” (start-ups). 

Reflecting the work of the Summit, the Governor’s office has issued a brief entitled, “Reinventing Connecticut: An Agenda for Action in the Special Session on Jobs”.  This document, which memorializes an agreement between the Malloy administration and the four legislative caucuses, addresses many of the above recommendations and was the subject of yesterday's special session of the General Assembly. 

In conjunction with this state-level review of economic development policies and practices, UWGNH donors can be confident that its investments in the Income category are demonstrably aligned with and complementary to the strategic direction offered above.