I took part in a focus group recently that involved lots of grousing by business owners. In New England, where complaining is a beloved pastime, I have become very familiar with what to expect in this kind of setting. I knew it would only be a matter of time before I heard one particular entry:
I can’t get my young employees to work hard. They are so entitled. They need a break every hour, they show up late, and they expect me to coddle them.
As one of two millennials in a roomful of Boomers, I resisted my initial impulse to defend my species. I’ve learned in workforce and education settings (where these sentiments come up all the time) that “clapping back”, as the kids call it, is not likely to convince people.
Though I’m skeptical of any narrative boiling down to “the problem with kids these days”, I’ve given these viewpoints a lot of thought. After all, we have a constantly changing relationship with our technology and society – changes that could scarcely avoid affecting how people relate to work.
So what are some of the work stereotypes about “millennials” (generally, those born between the early 1980s and early 2000s)? The Economist ran a piece on the myths about young workers, summarizing some of the commonly held beliefs:
Everything from their education in kindergartens to their participation in social media has turned them into team players. But at the same time they reject careerism and are allergic to being managed.
As you can see, generalities about young workers usually contain some mixture of positive and negative. A recurring theme is that they are not bound by the typical career path, with the implication that they are less willing than past generations to pay their dues. Variations include needing constant validation or “trophies for everything”, expecting more socially conscious behavior from their employer, and being overly or underly attentive to time spent on the job.
As the article points out, grousing about the work habits of young employees is a perennial fascination, often with slight relation to facts. In fact, by some measures, young people are even more career focused, competitive, and less socially conscious than older workers.
The Economist concludes:
[Workers] want roughly the same things regardless of when they were born: to be given interesting work to do, to be rewarded on the basis of their contributions and to be given the chance to work hard and get ahead.
As it turns out, differences within generations are as large as those between. I find this resonates most with my experience. Some of my friends are focused on getting through the day and feel no connection to their work, others are highly dedicated, even to extraordinarily meaningless tasks. Just like some people tend towards being conflict averse or risk-seeking, how people relate to work has to with individual personalities and desires much more than whether you were born in the 90s.
Regardless of the trends, the perception of a problem with younger workers is very prevalent. Generally, employers are not very good at overcoming these issues. The two most common strategies seem to be complaining or investing in cringeworthy millennial-attracting ploys (“no, there’s no benefits or job security, but we do have an ice cream machine and bean bag chairs!”). This list of “pampering perks” is taken from an article on how to attract young workers, with ideas ranging from the sensible to the idiotic.
Only now is the workforce development system dipping its toes into creating programs for how to manage younger workers comprehensively. As far as generational differences do exist, it is certainly employers’ duty to bridge the gap as well, rather than putting all expectations on young workers to meet their standards. I don’t think we’ll get there with company massages and keg parties.
Overnight the company founders became the first city fathers in what would today be called a huge company town. Both men and women slept in corporation lodging houses, ate in company dining-rooms, shopped in company stores, and were buried in company lots. Employees worked from five in the morning to seven at night. Women received from two dollars and twenty-five cents to four dollars a week, men about twice that...
Europe watched Lowell with something like amazement. Its rapid rise to industrial eminence interested and astounded economists, historians, and writers all over the world.
- Massachusetts; a guide to its places and people, written and compiled by the Federal writers' project of the WPA (1937).
This post is part of an ongoing series where I visit each of the 11 original Gateway Cities and record my thoughts on their community, economy, and civic culture. Lowell is the next stop.
Lowell is, generally speaking, the poster child for Gateway Cities. The consensus seems to be that of the original eleven Gateways, this northeastern Massachusetts city of 100,000 has most successfully turned around its fortunes. Public officials and the media consistently consistently point to Lowell as an example of what focusing on image and investing in important infrastructure can do to a mill town (within the state anyway – I’m not sure this type of good news travels very far).
Having visited a few times, I am inclined to agree. Though the city benefits from an advantageous starting point, it’s certainly one of the most exciting and economically vibrant Gateway Cities I’ve visited. For this series I wanted to look a bit deeper. How good is good? If things are really as they seem, what’s the secret sauce in Lowell?
Lowell: the Massachusetts-est of them all?
In addition to its status as favorite Gateway child, Lowell is perhaps the archetypal Massachusetts city. It carries the name of a Boston Brahmin (like Adams, Quincy, Gardner, Winthrop, Peabody, Boylston, Lawrence, etc…) and along with the last of these, was named after a wealthy textile patrician who probably never saw his namesake. Francis Cabot Lowell was the foremost of the “Boston Associates” who shaped the Northeast by building textile mills and the towns around them.
Just as familiar is Lowell’s path from factory boomtown and massive immigration hub to decline. As described in the opening quotation, Lowell was a textile company town, growing in the 1850s to contain the largest industrial complex in the United States. Like its peers, it lived by the loom and died by the loom. Eventually the industrial textile mills that powered the local economy moved south and then overseas. By the mid twentieth century, Lowell was a depressed place lacking jobs and opportunity.
But unlike some of the other cities covered in this series so far, the population of Lowell today is near its height – like many others, it reached its population crest in 1920, but it is back to almost the same level, unlike cities such as Fall River or Holyoke, which are still fractions of their previous size. In addition, today Lowell has built up more specialized and technical firms than other Gateways, and performs relatively well in metrics like employment gains and median income.
A Bit of Luck, a Bit of Love, and Good Planning
So how did Lowell end up in the winner’s column relative to Holyoke and Fall River? The answer is in the section’s title: a bit of luck, a bit of love, and good planning.
World War II provided a temporary boost to traditional manufacturing that had sustained Massachusetts economies for the previous century. But by the 60s and 70s, the writing was on the wall, and in some places had been for 50 years. Cities responded to the changing economic circumstances in different ways. Some wrung their hands and gnashed their teeth, some abandoned the city altogether, and a few met the challenge with proactive leadership.
Lowell, thanks to a couple of unique factors, took the latter approach. It made a conscious effort to shift towards comprehensive planning and a more diversified economy in the 1970s. The foremost among these efforts was the “Lowell Plan”, formed in 1979 as a nonprofit economic development organization tying in partners from the public and private sector to work together on collaborative city growth goals.
In retrospect this was a key time to be moving away from old school, top-down and manufacturing-dependent economies. 1979 was well before Public Private Partnership was every government’s favorite catch phrase. Everything I’ve read indicates that the Lowell Plan was a daring and meaningful experiment for its time, leveraging tens of millions of private and government dollars for education, workforce development, and economic growth..
A difference in approach informed how the city responded to later economic challenges. While many places in Massachusetts felt the “Massachusetts Miracle” in the 80s, that miracle was coming to an end in the 1990s. In 1992, Lowell was hit with a shockwave when Wang Laboratories, a $3 billion computer manufacturer based in the city employing 33,000 people, filed for bankruptcy .
The closure had a gigantic impact on Lowell’s economy. But unlike other cities, Lowell appears to have had better infrastructure, capacity, and even political willingness to deal with the loss of the company in the company town. Lowell pivoted and continued to build on strengths, taking the loss as further evidence that reliance on a single industry was a bad ide,a even in high tech sectors. A Boston Fed analysis of the booms and busts in Lowell found that while the ups and downs of the Lowell economy have been severe, the local economy was still better off than it would have been without the high tech sector that had made the bust possible.
Lowell’s Many Assets
I don’t want to leave the impression that Lowell is doing well because the powers that be willed it to be so. Meaningful economic development comes from leveraging existing community assets to build the wealth of inhabitants. When it comes to assets, Lowell would be well above the average Gateway City even if city leadership was incompetent (which it doesn’t appear to be) or if the state ignored it.
First and foremost, the University of Massachusetts Lowell. The fact that the state’s second largest and fastest growing public university is located downtown and runs programs from dozens of the old mill buildings provides a unique “anchor tenant” for the whole town. Similar to Worcester, “town-gown” relations aren’t the strongest, but having 20,000 student and faculty based in the city is a powerful economic engine that isn’t going anywhere.
The people are another significant asset. One reason that Lowell has not suffered severe population loss is foreign inmigration. Lowell has grown much more ethnically diverse in the last 25 years, with an enlivening effect on the local community. Lowell has the highest proportion of Cambodians of any city in the US, with a corresponding effect on local cuisine and culture. Puerto Ricans, Portuguese, Brazilians, Colombians, Indians, and Liberians and other African immigrants also form substantial communities.
More so than its neighbors, Lowell also received attention at the federal and state level. The name Paul Tsongas may not mean much to folks outside of Massachusetts, but he was instrumental to the government attention and financial firepower that has helped Lowell weather the economic storms over the years. As a US Representative, Senator from Massachusetts, and presidential candidate in 1992, hometown hero Tsongas tirelessly advocated for Lowell. His major issues in Congress were ecological and historical preservation, and he cultivated a reputation for economic revitalization. It’s probably due to his work that the National Historical Park that forms a centerpiece of Lowell’s downtown today exists.
The combination of economic flexibility and asset preservation has allowed Lowell to be relatively well positioned in the 21st century. Through skillful use of historical status and open space, the city does a good job cultivating a feel of modern entrepreneurship existing alongside the machines that powered the industrial revolution. For example, the University of Massachusetts-Lowell occupies space in old mill buildings that maintain their impressive original machinery.
This balance is not easy to do. Many other cities in Massachusetts don’t have the capacity to put underutilized properties to use unless they have a new occupant with deep pockets moving in. Trying to balance preservation and growth either leads to a jarring contrast between the past and present, or row after row of abandoned buildings. The temptation to clear “eyesores” and start again or focus attention on the outlying areas is strong.
Looking up, but a long way yet
I’ve been pretty glowing in my review of Lowell, but it would not be a Gateway City if everything was working perfectly. Lowell still suffers from slow job growth, underutilized properties, and serious poverty – we’re talking about one of the top performers among a class of Massachusetts’ most challenged cities.
An example of how those difficulties manifest themselves is the recent experience with the Hamilton Canal project a vital piece of downtown with an ambitious plan for mixed use redevelopment. Progress on the development has been slow because attracting a main tenant and arranging financing are both tricky (there are many similarities with Worcester’s City Square project). Trinity Financial, the developer that had been chosen to build out Hamilton Canal, pulled out in May. The state has a lot of money on the table but as is usually the case there are complex jurisdictional questions to be dealt with, things like contingent funding and various levels of government ownership. Patient money is hard to find, especially when developers can make a killing in and around Boston with much less headache.
Still, I’ll bet that Hamilton Canal makes substantial progress before City Square. The city has a firm idea of where it wants to go with the project and appears to have the leadership to make it happen. Although Lowell has a long way to go to reach its potential, it inspires confidence in onlookers.
Lowell’s success seems to be in process rather than product. The city has more resilience and flexibility that allow it to deal with crises, comparing well to the fragile systems (of politics, administration, or economy) in other Gateways. On its own, this has not propelled Lowell towards the high bar the state has set, but it’s headed in the right direction and is won’t be easily deterred by the roadblocks that stand in its way.
This is a wrap up of a short series on economic development ideas that are allergic to evidence. Parts one and two are here.
Aside from wasting public money, what do outrageous investments in megaprojects and inequitable economic incentives have in common? The common thread, and the rot at the root of economic development, is an ideology based in wishful thinking.
When economic development fails to meet the needs of the people it is supposed to serve there are a few plausible explanations. The more attention grabbing explanation is corruption and cronyism, which tends to draws a lot of attention and quick denunciation. The boring explanation is a lack of critical thinking and imagination on the part of public officials. Cities copy what’s popular, go for cheap wins, and try to take the shortcut on the complex path towards economic growth. A ribbon cutting is much easier than sorting out the threads connecting federal and state governance, education policy, tax rates, public investment, racial and economic inequality, local real estate markets (and on, and on…).
It makes a lot of sense that we end up where we do. We elect politicians to improve conditions, not to write a dissertation. It is hard to run a city or a state, and sometimes Pyrrhic victories seem better than slow infinitesimal progress. Striking a deal to focus on the process rather than the results doesn’t seem on its face so insidious, but the human mind has incredible ways to get us to believe that we are doing is right. The logical end result will always be things like stadiums and tax incentives.
At bottom, 38 Studios may be that rare political scandal that grew not from any lies that anyone told the public, but from the stories that desperate politicians told themselves.
So true. I’d just go back in and take out the word “rare”.
Here are a few rules I’d like to suggest to move us away from the wishful thinking paradigm.
Rule 1: Trust No Silver Bullets. That next convention center expansion or new real estate deal will not be our savior. Even important steps like supporting new entrepreneurship or getting zoning right are merely steps in the right direction. We want so bad for the answer to be something as easy and momentous as a huge public building but wanting will not make it so. We have to resist the temptation.
Rule 2: There’s Always Blowback. Something that seems brilliant can have unintended consequences in a decade. Urban renewal is a great example of a period of magical thinking, and the projects of that time are not so far from the stadiums of today. We’ll bulldoze blighted neighborhoods, the thinking went, and the problems associated with them will go away. Instead, the frenzy completely erased whole communities and wiped out local wealth. Many neighborhoods are struggling to recover from choices made in the 1950s. There are dozens of parallels today, each of which has important, predictable downsides. We need to be humble enough to recognize how our big plans could end poorly.
Rule 3: Hold Politicians to Realistic Standards. Like I said at the beginning of the series, I think people are beginning to finally get it. I’ve seen more articles criticize the way things are done, from megaprojects to megaevents like the Olympics. The rise of blogging and special interests news sites make these complex deals easier for interested groups to analyze and criticize than in the days of the citywide daily newspaper – although it can be harder for such sites to have the same pull.
The question is whether and how quickly this perspective will be adopted by public officials. One thing’s for sure – if you don’t say anything or vote as if these issues are important to you, the deals will continue. There’s just to much incentive for dealing behind closed doors for general distrust to have the same effect as calling out offenders.
From an excellent paper by Peters and Fisher examining the lack of impact of tax incentives:
The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government—providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems —and then letting the economy take care of itself.
It’s comforting to beat up on megalomaniac politicians, but this is really a sin of omission on the part of voters. We want someone who can affect the economy, and our political language reflects it. We yearn for someone who can “create jobs” or “bring home the bacon.” Simply wishing we had more control doesn’t mean we do and when we force someone to take that role this is the outcome we can expect. Voters have to recognize that the power that politicians actually do have is still quite important, just not as straightforward.
Just as I finished this post, I came across this article from the Springfield (Mass) Republican. A casino is set to open in Springfield, and the Republican’s reporter took a trip to Atlantic City to see how the former gambling hotspot is recovering from the decline of the industry. The answer? They’re diversifying their one horse economy…with convention centers.
While there’s some evidence that local government is getting a bit more savvy (or at least is under more scrutiny) on flashy white elephant investments, I’m not sure the same consensus has developed in a similar arena: public subsidies and tax benefits for companies to relocate.
It’s time to seriously pare back our addiction to this type of spending. There are as many cases as there are states of companies being lured in by the use of public money only to fail, leave again, or extract even greater public resources. I’ve previously written about how Texas could lead the way in cooling the economic development arms race (spoiler alert: they haven’t) and referenced before how badly Reno got fleeced by Tesla.
Just one extreme example that hits close to home in New England is Curt Schilling’s 38 Studios. Before he was famous for politically incorrect tweets, I’m told that Curt Schilling played baseball. After his retirement, Schilling started a video game company in Massachusetts with the modest goal of dethroning World of Warcraft, the highest grossing video game of all time. Ambitious, sure, but companies thrive on ambition.
Schilling convinced Rhode Island that subsidizing his company would turn around the struggling state, then at the height of its unemployment and economic problems. This sort of deal, where one state pays for jobs or offers a low interest loan to a company to relocate over a state border, is absurdly common in the US. I don’t need to tell you where this goes, right? Rhode Island gave 38 Studios a $75 million loan guarantee, and in 2012 the company declared bankruptcy. Litigation has dragged on to determine how much RI is on the hook for.
The New York Times did an excellent post-mortem that will take you through all the steps, but this sums it up well:
If there’s a lesson in all this, it probably has to do with the limits of what any government can — or should — do to bring about growth. Just about every state offers some kind of tax incentive or loan program for businesses looking to relocate. But Rhode Island went further than that; in its zeal to land Mr. Schilling, the state took on the role of venture capitalist, without having the expertise to do it well.
An actual venture capital firm would have been investing in many companies at once, to minimize its exposure, and it would have demanded a sizable equity stake. It would have taken a seat on the board so it could monitor the money closely and, if needed, restructure the company. Rhode Island, instead, threw most of its venture money into a single, highly speculative start-up, insisted that it more than double the size of its work force, and then walked away.
I tend to agree that government cannot and should not be responsible for making investments in individual companies. Even when they have the best of intentions, they don’t have the experience, capacity, or distanced judgment to make wise investment decisions.
While the article makes the point that the state acted inappropriately and ineptly as a venture capitalist, to me the affair brings into question the entire structure: where is the proof that paying firms in the name of providing jobs is a good idea?
One Man’s Investment is Another’s Corporate Subsidy
The 38 Studios story gets more play than others like it because of the personalities involved, but if you get too caught up in the narrative, you’ll miss the larger point.
First, it’s not very useful or interesting to talk about good intentions. I’m sure Curt Schilling thought his company would succeed – he’s also lost tens of millions in the project. When we talk about the use and abuse of the subsidy system, the reasons vary. Some have noble goals, some are greedy, some are just making decisions that are advantageous within the economic system.
Second, it’s not a partisan or regional issue. Republicans and democrats both support a wide range of corporate subsidies. No state that I know of is appreciably leading the pack when it comes to moving away from ineffective corporate subsidies. There’s just too huge a disadvantage to being first.
Instead, what you should take away from the story is that far more likely than a 38 Studios is the everyday transfer of wealth from citizens to businesses. Have a look at Rhode Island’s page on Good Jobs First’s Subsidy Tracker:
There’s 38 Studios, third on the list, but it is easily outranked by the 30 subsidies given to home state hero CVS Health (from Woonsocket, RI). I’ve talked about the subsidy tracker before, but you should really look at it in your own state.
In the vast majority of cases, when a state or local government provides tax incentives for jobs, they are not creating new economic activity but instead simply relocating it from a different place. Because of measurement issues, it’s also unclear that the incentives themselves are what induces the economic activity at all. It could be that they just sweeten a decision that is already going to be made, squeezing local finances for no local gain. After all, as critics of these schemes point out, the jobs are going to exist somewhere if no one subsidizes them.
Proponents of tax incentives will also point to equity as an advantage. Maybe, even with the above shortcomings, it still makes sense to use the lever taxes to bring jobs to places they might otherwise not go – high poverty or unemployment areas that desperately need to build an economic base. The problem is that tax incentives are rarely used in the areas that fit the profile of a market failure. Even in the rare cases that incentives are used to bring jobs to high-need places, the local governments can ill afford to subsidize the companies, especially if wealthier areas in the hunt bid up the price to attract a business.
A Zero Sum Game
Academics and top level policy makers understand that economic growth actually depends on regional cooperation, but word hasn’t reached everyone. Indiana and Illinois to this day go back and forth on a recruitment border war, boasting about how they will “rip the economic guts” out of each other. This is obviously a point of pride for the politicians, but sounds to me like someone bragging about how much they paid for their used car.
There’s no question government has an important role to play in the economic landscape. The things I’ve outlined above are not criticisms of the federal government investing in basic research, or local and state governments incentivizing the development of new businesses, or even helping existing businesses get to scale. State governments should have a role in investment in workforce and infrastructure, especially in regions with fewer resources, as a means to make them attractive to business. Local governments should work closely to provide services businesses and workers need, which inevitably means the expense of resources.
What we really need is a coalition at the federal level that can help the states help themselves out of addiction to corporate subsidies. Don’t hold your breath for this to happen in Washington. In the meantime, think about what your state could do to get itself out of this dangerous game.
I’m working on a longer post about the ways sports teams, giant sporting events and new stadiums fail to meet their expected economic development goals, but I couldn’t wait to tee this one up when it appeared in local news sources.
To get you up to speed: the PawSox, the Red Sox AAA affiliate, have decided to move out of their current stadium in Pawtucket, RI and are shopping for a new stadium in Providence (I can only assume they would become the ProvSox?). The city and state balked when the team laid out the preconditions – $120 million in public funding and 30 years of property tax exemption on what is likely a plum piece of real estate, in addition to taxpayers bearing the increased infrastructure costs.
Salivating at the prospect that Providence could pass up this horrific deal, some Massachusetts cities are already reserving their place in line. Over the Mayor’s apparent opposition, the New Bedford City Council decided to announce their interest in the team. This prompted this extremely, extremely unfortunate headline in GoLocalWorcester:
To which the answer is already a resounding no, but even more emphatically if the price tag to land them has 9 digits. Anybody who thinks the city looks bad by failing to spend millions of taxpayer dollars that it does not have to furnish team owners’ profit is not someone whose opinion should be regarded highly.
Yikes. There’s some evidence in the article that public officials are finally getting savvier in how they deal with this topic, but you never know what deals are being discussed behind closed doors.
If you find this topic interesting I highly recommend the website Field of Schemes, which has tons of acerbic, hilarious and often depressing writing on the ways sports teams shake down local taxpayers through stadium deals. I really wish there wasn’t enough news to sustain a blog on this topic, but unfortunately there is.