Economic Development

Growing Cities That Work for All

Introducing the Workforce of the Future initiative: Applying a complexity lens to U.S. cities

Growing Cities That Work for All

May 21, 2019

The United States has posted more than 100 consecutive months of net job gains since the economic recovery began in 2010, making this the longest expansion in seven decades. Yet, for many, wage growth has lagged, leaving many families economically insecure. Meanwhile, job and economic growth continue to accrue in select corners of the nation, leading to disparate economic and social outcomes across the country.

This uneven progress reflects, in part, a nation grappling with an accelerating pace of change. Powerful new technologies have enhanced people’s and firms’ ability to achieve unprecedented productivity and have made the global economy more interconnected than ever. At the same time, these forces are making some skills and knowledge obsolete. As demand for specific knowledge and skills rises, the people and places that can meet these demands thrive, while others lose ground.

Communities throughout the United States must find new solutions that address rapid transformation of industries and the labor force. Systems and institutions that helped foster inclusive economic growth and prosperity in the past century, like higher education, workforce development, and social policy, have struggled to adapt to today’s circumstances. Work-based benefit and safety net programs are ill-equipped for a labor market in which people will have many careers, and where work is increasingly organized around short-term assignments rather than traditional jobs.

Worker retraining and adjustment programs are often not linked to employment opportunities. Economic development plans often involve tax incentives for industries that may not be strategic. To pay for such incentives, metro or regional officials must often draw from funds that could otherwise be spent on public goods. Meanwhile, top-down federal programs are unable to respond to communities’ unique challenges and opportunities

To address this and help people adapt, local government and business leaders should pursue the following objectives:

1. Grow their local economies. Growth increases opportunities for work, ensures efficient labor market matching, and spurs wage growth. How local economies grow matters, as not all industries are equal. Fostering complex industries that take advantage of existing capabilities in a local economy, while upgrading them, can accelerate growth and industry diversification.

2. Help workers adapt to the fast-changing demands of today’s labor market. Local employers and intermediaries should assess how displaced workers’ skill sets differ from those required by in-demand occupations, fill the gaps, and seek to connect these workers to jobs. Making growth work for all will involve creating a lifelong learning infrastructure that is responsive to the new skills required and that meets workers where they are.

3. Enable local systems and institutions to increase economic mobility and opportunity for all. Increasing job quality and upward mobility for all requires firms paying higher wages and offering meaningful employment. But it also depends on access to affordable housing, efficient transportation, convenient childcare, and benefits—all factors that make workers more productive and firms more resilient. The task of creating a new institutional scaffolding to address these needs as low-skill work proliferates falls to regional policymakers, who can respond to specific challenges unique to each locale.

Introducing the Workforce of the Future initiative: Applying a complexity lens to U.S. cities

The Brookings Institution’s Workforce of the Future initiative aims to inform cities as they pursue the above objectives. This report primarily focuses on the first objective: informing cities’ growth agendas by identifying industries in each metropolitan area that offer viable and effective paths toward accelerated growth.

Our analysis uses the empirical insights of economic complexity, which focuses on the capabilities required for industries to emerge and on pathways to strategically diversify a city’s industrial base. This approach provides a unique assessment of each city’s capabilities to host new industries and each industry’s propensity to spur growth. We find that our data-driven metrics of city and industry complexity, which have proven predictive at the country level, also predict growth at the city level. Through our metrics, policymakers can anticipate the future needs of their city as they strive for more inclusive growth.

The report outlines four cities’ industrial choices. These options are proposed in the context of transformational trends, such as the rise of automation and the proliferation of contract work—shifts that require a re-prioritization of policies to help people adapt. We emphasize industries that offer good jobs—those that provide living wages and benefits.

Policymakers around the country face similar challenges as they strive to lure expanding businesses or retain local industries, but they require tailored, location-specific solutions. Using an economic complexity lens, our methodology provides a map for investing in keystone industries that are both viable and foster future growth.

Guide to the report

Our research aims to provide insights to local leaders on how the rapidly changing economy is reshaping communities’ distinct advantages and opportunities. Because this plays out differently depending on the unique mix of industries in each city, and the implicit capabilities they depend on, each community needs to chart its own tailored strategies toward growth. We propose a framework for regions to grow good jobs through capability-based industrial development strategies where firms specify the inputs they need to be productive and cities become more resilient and attractive as they invest in those inputs.

The main objectives of this report are to:

1. Review the main underlying causes of structural change in the national labor market—from automation to digitalization to global competition—and the nature of the policy responses to date in addressing these challenges.

2. Propose a tailored approach to helping policymakers and companies bring economic growth to their regions by applying data-driven network analytics to reveal industry and city growth patterns within the U.S.

3. Demonstrate how the network analytics approach can inform local economic development strategies that foster growth and good jobs through four city-specific case studies: Nashville, TN; St. Louis, MO; South Bend, IN; and Boise, ID.

There are complementary resources to this report, including an online visualization that will feature the results of this report and continued city level research. There is also a technical paper that describes the methodologies used in this report in more detail titled “Economic complexity and technological relatedness: Findings for American cities,” which is available at the same site.

Click here for the full report.

The Center supports Brookings’ Workforce of the Future initiative and collaborates actively with scholars and researchers analyzing how to improve inclusive growth in cities so as to attract vibrant industries and create good jobs.