The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
Southeastern States Mind the (Skills) Gap
During the past few years, we have heard from a significant number of regional business contacts about the challenges they experience filling certain positions and concerns about a skills gap facing the Southeast. We heard this from various industries, most often about engineering, construction, and IT jobs. The most recent Southeastern Insights mentions this widespread issue.
This skills shortage situation is not unique to the Southeast. The U.S. Chamber of Commerce Foundation published a state-by-state analysis last month measuring performance in a number of areas that contribute to economic prosperity. Their key conclusion reiterates our contacts’ concerns: that mounting skilled-labor shortages are on the horizon to such an extent that they may soon hinder economic growth. According to the study, the current skills gap dilemma is expected to grow substantially as baby boomers retire.
Fortunately, there’s a bright side: many states have recognized this situation and have taken steps to address the ostensibly approaching workforce crisis. Many of our contacts from both private and public sectors pointed to joint initiatives created by states and businesses designed to confront and abate the situation; which the U.S. Chamber of Commerce Foundation study says is essential to closing the gaps. Below is a sample, extracted from the study, of some of the efforts Sixth District states have taken:
- In 2013, the state launched a College and Career Ready Task Force charged with identifying ways to better prepare students for the workforce by training them in the skills demanded by growing industries across the state.
- New and expanding businesses can get workforce development services through the Alabama Industrial Development Training program, which offers services to businesses in need of skilled workers, including preemployment selection and training, leadership development courses, and third-party process improvement assessments.
- The Alabama Technology Network provides skills training for the manufacturing and high technology workforce. The network connects businesses to the portfolio of training resources and programs provided by the state’s colleges and universities, offering services through regional centers.
- The Go Build Alabama initiative works to attract talented workers to construction and skilled trades.
- Quick Response Training enables new and expanding businesses in need of training to partner with community colleges and other educational institutions in the state to develop and deliver workforce training programs.
- The Incumbent Worker Training program supports training the existing workforce to enhance and maintain competitiveness.
- The Career and Professional Education Act guides Florida’s efforts to diversify its economy and develop a more skilled workforce by encouraging collaboration among education, industry, workforce, and economic development stakeholders from across the state.
- In early 2014, the state approved a $44.7 million Science Learning Center on the University of Georgia’s South Campus, providing state-of-the-art facilities aimed at expanding the pipeline for students in science, technology, engineering, and math (often referred to collectively as STEM).
- Groundbreaking also took place for the Georgia BioScience Training Center, which will support training for companies that choose to locate within the state. Georgia Quick Start, the state’s job training program, will build and operate the state-of-the-art biotech training center.
- Via the Small Business Employee Training Program, employers can receive up to $3,000 to defray the costs of off-the-shelf training programs for an existing employee.
- The Louisiana Workforce Commission established Workforce Partners to recognize businesses that have committed to building a “job ready” workforce in the state through support and training.
- The Strategies to Empower People program provides access to job training, job readiness support, vocational education programs, and a variety of other skills-development services for those receiving government assistance.
- The Workforce Investment Network consists of more than 60 training and employment centers around the state where employers and job seekers can access services like training, job postings, on-the-job training programs, employment screening services, and job placement assistance.
- The Mississippi Development Authority also maintains a team of workforce specialists who work with colleges, businesses, workforce development professionals, and other stakeholders to identify resources useful to a particular business. The authority also builds partnerships to pursue needed training services.
- The University of Mississippi maintains a Professional and Workforce Development program, offering online enrichment courses, certification programs, and outreach services, bringing tailored training programs directly to the employer.
- The Tennessee Job Skills grant program offers support to technology companies that create “high-skill, high-wage” jobs, reimbursing eligible costs incurred in training development implementation.
- Entrepreneurs in need of quick turnaround in receiving support for training costs can make use of the state’s Job Based Training Reimbursement program, which provides support within the first 90 days after a new job is created and training starts.
- The FastTrack Job Training Assistance Program offers employers state support to cover costs for classroom instruction, on-the-job training, training-related travel, training vendors, and development of training materials and programming.
Sixth District states appear to be on a solid track to address skills gap challenges, combining investment in training, education, and business assistance as a long-term workforce development strategy. Time will tell if the investment pays off (we should know sooner rather than later, as boomers are expected to start retiring in droves).
To learn more about states’ efforts, as well as their rankings across five policy areas—talent pipeline, exports and international trade, technology and entrepreneurship, business climate, and infrastructure—check out the U.S. Chamber of Commerce Foundation’s study. There’s also a nifty interactive map you can use to view state rankings and data easily.
By Rebekah Durham, economic policy analysis specialist in the Atlanta Fed's New Orleans Branch
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A City of Big Ideas
Here in the Southeast, a buzz has been growing around the idea of innovation. In my hometown, Atlanta, startups have been popping up like weeds. What makes Atlanta a good place to innovate? To start, Atlanta is home to a number of top-tier universities and colleges, including Emory University, Georgia State University, Morehouse College, Spelman College, Agnes Scott College, and Georgia Tech, which U.S. News recently ranked fifth in the country for engineering. The city also boasts one of the fastest-growing urban populations in the country and a cost of living below the national average.
Among recent developments, a study done by the Kaufmann Foundation ranked Atlanta second in the nation in entrepreneurial activity. As well, Georgia companies drew in more than $116 million in venture capital funding in the first quarter of 2014, compared with $46 million just two years earlier. On top of it all, Forbes magazine placed Georgia Tech’s Advanced Technology Development Center (ATDC) on its list of the top 12 Business Incubators Changing the World. So what’s the deal? Is Atlanta becoming the next Silicon Valley? Why has innovation been the buzzword of the last decade here?
A growing consensus holds that innovation is the key to economic growth in developed economies. Innovation enables firms to become more productive and thus increase output without increasing the amount of inputs (labor, capital, etc.). Throughout modern history, the kings of all innovations are the game changers, sometimes referred to as general-purpose technologies. Game changers include inventions including the steam engine, electrical power and, more recently, information and communication technology. Juan Moreno-Cruz, an assistant professor in the school of economics at Georgia Tech, noted that although you can’t always recognize a game changer right away; “there are small things that combine that make general-purpose technologies important.”
Without the small things, general-purpose technologies never become significant, and it’s here that start-ups become important. Stephen Fleming, vice president for economic development and technology ventures and executive director of the Enterprise Innovation Institute (EI2) at Georgia Tech, says that, “Innovation is the reason that they exist.” Part of Fleming’s role is to oversee Georgia Tech’s ATDC, one of the nation’s oldest—it was founded in 1980—and largest business incubators attached to a university. Throughout the years, it has graduated more than 150 companies, which together have acquired over $2 billion in outside financing. “We shelter them from the ups and downs of the market,” says Fleming. “We do this for a while so that the company does not die from the downs.” But how exactly does the ATDC foster innovation in their start-ups? “We allow them the chance to fail.”
This is one of the many things that Fleming feels the U.S. does right. “There is a difference between being a failure and failing. If you fail, you just had a very expensive education on what not to do.” This holds true even for established small and medium-sized enterprises. “Let your people try stuff!” A survey done by PricewaterhouseCoopers asked CEOs which elements are some of the “most important ingredients to successful innovation,” and 57 percent of respondents agreed: “the right culture to foster and support innovation.” Meanwhile, 37 percent also responded by citing a “willingness to challenge norms and take risks.”
So, back to the question at hand: Is Atlanta becoming the next Silicon Valley? Fleming (wearing his “No Valley” button) would answer no; we’re becoming a better version of Silicon Valley that is welcoming to small companies. He points out four parts of our innovation ecosystem that make Atlanta a great place to innovate right now: First, the city has top-tier talent from all of the schools mentioned above. Second, unlike Silicon Valley, the city has the customers for the companies (Atlanta ranks third in the nation among cities with the most Fortune 500 headquarters). Third, customers who aren’t here are just a nonstop flight away, thanks to Hartsfield-Jackson Atlanta International Airport. Fourth and final, Atlanta has plenty of capital to work with.
It’s certainly a compelling case, and I’m looking forward to seeing how it plays out.
By Trevor Lindsay, an economic intern in the Atlanta Fed’s research department
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Listening to Students
As a student, I anticipated parent-teacher conferences with dread. My grades were fine; it was just that I was a bit of a clown. The rides home from these awful meetings were usually in silence, although my father’s red face said it all. The post-conference ritual was repeated twice a year: my mother would defend me, my father would ground me, I’d behave for a week or two, then it was circus time again.
Earlier this week my wife and I met with our son’s fifth grade teacher. Having been through these events with my two older boys, and knowing our youngest’s inclinations towards the “circustry” arts, I prepared myself much in the same way I imagine my father prepared himself. But what I heard was terrific! While he does tilt towards silliness at times, he does his work, cares about his classmates, and is respectful to his teachers. It dawned on me as we listened to his teacher describe our little boy that she really understood who he is. More importantly, she listened to him, and she has learned how to push his learning buttons.
In the last few weeks I was fortunate enough to have the opportunity to listen to some students myself. I visited a few economics classes at the University of West Georgia in Carrollton and Dalton State College to talk about the Federal Reserve and recent economic performance. I also met local high school AP economics students when I was in Carrollton. I found these young folks to be engaging, inquisitive, and interested in the economy and how its performance affects their future.
They asked great questions like “Does the Fed consider productivity measures when analyzing the performance of labor markets?” (yes, we most certainly do) and “Is underemployment worse today than it was during past economic recoveries?” (yes, it most certainly is). Their questions showed a depth of understanding of just how nuanced current economic analysis really is. And they asked terrific questions about the Federal Reserve and its role as well.
I’ve written before about the Atlanta Fed’s Economic Education program and how we work with teachers throughout the Southeast to do what we can to equip these dedicated people with tools to help teach economics to students. We listen to their needs and apply their feedback in developing our workshops and online programs. We will continue to work with our teachers and, based on their feedback, develop lesson plans and tools they can use to help them push their students’ learning buttons.
By Mike Chriszt, a vice president in the Atlanta Fed's public affairs department
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Education Resources Not Only for Educators
Eight years on, we continue to apply lessons learned from Hurricane Katrina. A potent teaching tool developed by our economic education team here at the Atlanta Fed is titled Katrina’s Classroom: Financial Lessons from a Hurricane, which focuses on important lessons in financial preparedness.
Our team is updating this important series and has developed innovative tools for the classroom. Each segment in this four-part series will have new lessons and technology-based resources as part of the Classroom Economist project. "Lesson 1: Katrina Strikes" and "Lesson 2: In the Aftermath" have already been revised and are available online. The revisions of the remaining two lessons will be available at the end of September and December, respectively. Lesley Mace, our economic and financial education specialist at the Jacksonville Branch, recently wrote about this new offering in the Atlanta Fed’s online newsletter Extra Credit.
While Katrina’s Classroom was developed for educators, there are other classroom tools for everyone regarding financial responsibility, as well as basic economic facts, recent developments in the national and regional economy, and the Federal Reserve in general. Check out the Atlanta Fed’s Education Resources page for information about all our products, and also be sure to see the even wider range of resources available throughout the Federal Reserve System.
Finally, over the next year we’ll all have a great opportunity to learn more about the Fed and its history as we commemorate the centennial of the Federal Reserve System. The Federal Reserve System was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law. In May 1914 the charters for the 12 Reserve Banks were signed, and on November 16, 1914, the Reserve Banks opened for business. The Board of Governors has developed a web page with links to individual Reserve Bank sites that focus on the centennial. Here’s a link to the Atlanta Fed’s centennial page. More information will be posted to these sites throughout 2013 and into 2014.
By Mike Chriszt, a vice president in the Atlanta Fed’s public affairs department
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A couple of months ago I started my position as an intern for the Atlanta Fed's Jacksonville Branch. I like to think that when I started work here, I knew as much or more about what the Federal Reserve did as the average American citizen, but it didn't take long for me to find out just how little I did know.
Before coming to the Jacksonville Branch, I never would have thought that an initiative like the Regional Economic Information Network (REIN) would be undertaken by the Federal Reserve. I assumed that all of the data used by the nation's central bank were contained in various complex charts and tables, and I did not even dream that they would be concerned with anecdotal information provided by a network of business contacts cultivated and developed for their insights and views of the economy. Nor did I have any idea that the Fed sponsored an Economic and Financial Education program. I was impressed by the amount of energy the Federal Reserve devotes to providing sound economic training to the education community.
There's also another part of the Bank that I learned about—the Atlanta Fed's Community and Economic Development group. Recently, I was asked to help out with a presentation at the Jacksonville Branch on the State Small Business Credit Initiative. Janet Hamer, the senior community development manager at the Jacksonville Branch, had used the Bank's contacts to invite members of the local banking community to hear this presentation.
In attendance were 26 small business loan officers and bank executives from the Jacksonville-area financial community. Also in attendance were members of the financial regulatory community to assist in answering questions that might arise. This particular event was one of seven presentations held in various locations throughout Florida. Statewide attendees included representatives from 60 banks and eight credit unions.
The focus of the program was on the Small Business Loan Support Program, which is part of the U.S. Treasury Department's State Small Business Credit Initiative (SSBCI). The SSBCI was created as part of the Small Business Jobs Act of 2010 and in Florida consists of just over $97 million provided to the state by the U.S. Treasury for the purpose of either strengthening existing loan and equity programs or creating new ones.
The Small Business Loan Support Program was designed to guarantee up to 50 percent of the small business loan in order to allow lenders to approve business credit in circumstances that did not quite measure up to their current standards.
Bringing groups together to discuss programs like the SSBCI and to collectively consider how organizations might think about local solutions is a big part of what our Community and Economic Development group does throughout the Southeast. For more information on this important and behind-the-scenes group at the Atlanta Fed and its branches, please visit its website.
By Gregory Walker, an intern with the Jacksonville Branch's REIN group, with additional content from Janet Hamer, senior community development manager at the Jacksonville Branch
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Economic education: A call to action
Real Time Economics blogged on a recent poll of fifth graders through high school seniors about work, education and training, and their entrepreneurial aspirations. Before turning to the poll itself, I wanted to spend a moment on the group that was behind it.
The survey was performed by Gallup and Operation HOPE, a nonprofit that promotes financial literacy. I heard Operation HOPE's founder, chairman, and chief executive officer John Hope Bryant speak with passion about financial literacy a year ago, and his message has stuck with me. As the group's website notes, their mission is to expand economic opportunity in underserved communities through economic education and empowerment.
In describing the poll, Real Time Economics' Brenda Cronin wrote that:
"According to the first findings, released Thursday morning, 77% of all students surveyed want to be their own boss; 45% plan to start their own businesses and 42% went even further, saying they agreed with the statement "I will invent something that changes the world."
The press release from Gallup describing the poll goes on:
"Despite their energy and ambitions, the Gallup-HOPE Index findings suggest many students are not getting the education and work experience they need to help achieve their goals. While 87% agree that the more education they get, the more money they will make, far fewer report getting the type of practical knowledge and experiences that will be useful once they are in the workforce.
"Less than 6 in 10 students (58%) say they have a bank or credit union account with money in it, and just over half (54%) agree their school teaches them about money and banking. Half of students (50%) say their school offers classes in how to start and run a business."
It is heartening to see evidence that young people remain engaged in the entrepreneurial spirit, but it's also clear that we need to do even more to help equip them with the necessary tools to achieve their dreams.
The Atlanta Fed's economic education team and other Federal Reserve education efforts are working to meet this need by helping teachers learn new ways to teach economics and personal finance and also by providing rich online content and resources for teachers, parents, and students.
Our latest addition to the resources available online is "The Classroom Economist," which offers videos, a PowerPoint lesson, and other content designed to enhance teachers' presentation of topical economic and financial issues.
In addition to the resources online, our economic education team reaches out to teachers directly through workshops and other special presentations. And, as I noted, we're not the only ones operating in this field. Our colleagues in the Federal Reserve System also have many resources and tools aimed at improving economic and financial literacy.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
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