When traditional economic development efforts disappoint or fail, offering incentives to attract people may be the answer. Why not offer incentives to people who relocate and let them find a job, start a business or work remotely. Communities benefit from workers’ spending no matter where their employers are located. Rather than waiting on new and existing businesses to create jobs, it may make more sense to recruit people directly. By being proactive, communities are able to negotiate directly with potential workers and better insure that they live locally, have the right skills (doctors, teachers, etc.) and thereby maximize their contribution to the local economy.
For example, when local residents pay State and Federal taxes to help fund teacher pay, the expectation is that the community will get its fair share of those taxes in return when teachers are paid. In reality though, many teachers choose to live outside the community, where they spend their paychecks. I have worked in communities where more than half of the school district’s teachers lived in surrounding communities, primarily because housing and the social environment better suited their needs. In many cases, increasing the local supply of appropriate housing is enough to attract teachers and stem the outflow of money, but if it isn’t, incentives to live in the school district may be an option to consider.
Many economic developers think that recruiting skilled workers is going to be the next big challenge for communities. Aggressive community development efforts help communities create an excellent quality of life, which in turn can be leveraged to recruit and retain residents. This is essential because communities need talented workers to attract other talented workers, the old chicken and egg dilemma. Addressing the talent issue sooner, rather than later, gives communities a leg up on the competition.
Often, communities with a great quality of life do not have to offer financial incentives to attract residents such as professionals, entrepreneurs, retirees, young people, telecommuters, creative workers, etc. Insuring that quality of life factors meet and exceed expectations is a Magnetic Community strategy that applies universally to recruiting businesses, residents, tourists and retirees.
Awarding incentives such as student loan repayment assistance, moving cost reimbursement, cash, co-working space, discounted/ free rent and home building assistance to individuals diversifies risk by giving smaller incentives to a larger group of diverse individuals. If a large incentivized business fails, the loss can be catastrophic; if an individual defaults on a loan or fails to perform on an agreement, the consequences are not going to be as great.
Many of today’s business owners, entrepreneurs and employees are more interested in quality of life and sense of community than traditional location criteria. Amenities such as open space, multiuse trails and recreation are at the top of their priority list. In many instances, jobs follow people, in that people pick a place to live and raise a family, and then look for work, work remotely or start a business. More times than not, skilled employees, rather than businesses, are looking for a specific community to set up shop: one that has a connection to the Internet, an excellent quality of life and/or a location near family and friends.
Many rural high school graduates leave their hometowns to attend college on local scholarships and never return. This practice of awarding scholarships to bright high school seniors is like paying the most valuable residents to leave. Later, when they want to return, they are unable to find housing or a job. By assisting with the cost of constructing a new home or subsidizing a move, communities are able to lure both new and returning young people. It’s not all about the money, but when young college graduates are getting started, it can make a real difference.
Magnetic Communities understand that talented residents are a key element in attracting and retaining money. For example:
- Residents who telecommute attract money when they get paid by businesses outside the local economy and retain money when they spend locally.
- Residents working at local branch manufacturers attract money when they get paid with money earned from the sale of goods and services sold outside the local economy and retain money when they spend locally.
- Residents commuting to jobs outside the local economy attract money when they get paid and drive home. They retain money when they spend locally.
- Resident entrepreneurs, who start businesses that sell products and provide services outside the local economy, attract money when they get paid and retain money when they spend locally.
- Resident retirees attract money when they receive retirement income and retain money when they spend locally.
In the final analysis, communities and governments cannot create prosperity. Residents must prosper for communities to prosper, and communities must prosper for governments to prosper. The obvious approach then is to implement economic development strategies that attract prosperous and talented residents. Just think about it, when was the last time you saw a prosperous community without prosperous residents.