Blog: Economic Development Needs to Address Wealth Generation

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Blog: Economic Development Needs to Address Wealth Generation

By: Max Backlund

Note: The opinions expressed are those of the author alone and do not reflect an institutional position of the Gardner Institute. We hope the opinions shared contribute to the marketplace of ideas and help people as they formulate their own INFORMED DECISIONS™.

In a previous blog post I outlined some of the challenges Utah faces if we want to use economic development to address issues like upward mobility and the American Dream. The decline of the American Dream is well documented, and based in two trends: lower growth rates for Gross Domestic Product and greater inequality in the distribution of growth.[i]

Although wealth generation has been connected to economic development for more than 30 years, it has yet to make any observable impact on economic development planning in Utah. In 1988 the National League of Cities authored a book that includes the following definition of economic development:

“Local economic development refers to changes that increase a local economy’s capacity to create wealth for local residents using human, financial and physical resources.”[ii]

This concept is included in the 2019 GOED strategic plan in a section about seeking better measures of success:

“This reflects the transition from a recession-driven emphasis on job creation (the focus in the early 2010s) to a renewed focus on wealth generation and asset building among communities (reflecting 10 years of economic growth in most states).”[iii]

The 2019 GOED plan also identifies upward mobility as part of a much broader mission statement:

“Building on its success, Utah will elevate the lives of current and future generations through an exceptional quality of life, provide economic opportunity and upward mobility, and encourage business growth and innovation. Utah is home to attractive, healthy urban and rural communities where residents and businesses thrive, and visitors feel welcome.”[iv]

While this vision goes beyond new jobs and wages to include upward mobility, the proposed metrics are traditional economic development goals—high-paying jobs, workforce development and strategic industry development. Regarding these goals, the GOED plan offers this statement,

“Identifying the right metrics to supplement the basic jobs and investment tallies has remained a challenge. Utah has the chance to revamp both its metrics and its reporting processes to align with the priorities identified in this strategic plan as well as those articulated by the Legislature.… The monitoring and measurements options laid out here are intended to spark a conversation that leads towards consensus building rather than dictate the actual metrics to be used.” [v]

Including the new concepts is a step forward, but planning in Utah does little to engage with the problem of wealth building. The Economic Development Administration provides guidance for addressing wealth generation in its guidelines for producing a comprehensive economic development strategy (CEDS):

“…the concept of wealth is one that should be highlighted because of its natural alignment with asset-based strategies and approaches. More than just jobs and income, regional wealth is represented by intellectual, individual, social, natural, built environment, political, financial, and cultural assets. These assets, when invested in, nurtured, and leveraged appropriately, can reflect the true level of a region’s economic (and social) well-being.”[vi]

The EDA guidelines for including wealth generation in strategic plans are meant to improve regional economic development planning through Utah’s seven economic development districts. These guidelines include a broader view of prosperity and economic resilience.[vii] Utah’s CEDS represent more than 650 pages of economic development planning, and yet wealth generation and upward mobility are mentioned only once.

If economic development is a primary tool to address the diminishing American Dream then it should do more to engage with the challenges to wealth building that moderate-income Utahns are facing.

Max Backlund is a senior research associate at the Kem C. Gardner Policy Institute.

 

 

[i] Chetty, R. et. al. (2016). The Fading American Dream: Trends in Absolute Income Mobility Since 1940. Retrieved from https://opportunityinsights.org/paper/the-fading-american-dream/

[ii] Kane, M. and Sand, P. (1988). Economic Development: What Works at the Local Level. National League of Cities and Towns.

[iii] Utah Governor’s Office of Economic Development. “A Plan to Elevate Utah’s Economic Success.” Retrieved from https://issuu.com/goed/docs/utah-goed-2019-strategic-plan

[iv] Utah Governor’s Office of Economic Development. “A Plan to Elevate Utah’s Economic Success.” Retrieved from https://issuu.com/goed/docs/utah-goed-2019-strategic-plan

[v] Utah Governor’s Office of Economic Development. “A Plan to Elevate Utah’s Economic Success.” Retrieved from https://issuu.com/goed/docs/utah-goed-2019-strategic-plan

[vi] Economic Development Administration. (2020). Comprehensive Economic Development Strategies: Content: Evaluation Framework. Retrieved from: https://eda.gov/ceds/content/evaluation-framework.htm

[vii] These recommendations are based on the work of a group called WealthWorks. You can learn more about including wealth generation in regional planning at https://www.wealthworks.org/basics/explore-regional-wealth-building/wealth-eight-capitals