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Here’s how you can help Economic Growth DC:

1) Follow us on Twitter @GrowthDC. You can get to our Twitter page by clicking the Twitter icon at the bottom of this page, or go to http://twitter.com/growthdc

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3) Share this and our other blog posts with as many friends as you can by using the links at the bottom of each post.

4. Go to http://economicgrowthdc.org and click on the “Get Involved” button to join our mailing list. If you are currently on our site, just click the “Get Involved” button at the top of the page.

4) Tell as many people about Economic Growth DC as you can and that you think we’re working on solutions for some of DC’s biggest challenges.

5) Stay in touch with us with comments, suggestions and bring issues affecting DC that are important to you to our attention.

6) Recommend a few people to us that might share our collective priorities. We are looking to build a grass roots infrastructure and supporter database.

7) And of course, like any non-profit, we rely on donations from our supporters for our survival and to get our message out. If you are able to contribute even a small amount, that would be much appreciated and very helpful. Visit our website’s donation page at http://economicgrowthdc.org/donate. Again, if you’re already on our site, just click the “Donate” button at the top of the page.

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Our executive director Dave Oberting sat down recently for an interview with Alex Vidales from Pilot Waves. The interview starts at 3:35 and covers a range of topics. Leave us your feedback in the comments section. If you are a Windows Explorer user you must have a Microsoft MP3 player properly installed on your computer. If you use Chrome, it seems the recording does not stop properly once it starts. If you have difficulty with the embedded version, click on the link below to stream the interview from SoundCloud.

 

 

Dave Oberting-Alex Vidales Pilot Waves Interview on SoundCloud

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Mariott Entrance Sign

 

Incentives will get most of the attention in the competition to land the Marriott headquarters and the 2,000 jobs that come with it. And it will cost millions. It’s an unfortunate reality of corporate relocations. But the incentive packages will be roughly the same from all three jurisdictions and so the decision will hinge on something else — the business climate.

Clearly Marriott’s CEO, Arne Sorenson, was telegraphing that he wants to be in the District when he said, “I think it’s essential we be accessible to Metro and that limits the options. I think as with many other things our younger folks are more inclined to be Metro-accessible and more urban. That doesn’t necessarily mean we will move to downtown Washington, but we will move someplace.”

The only thing that will keep him out of the District has nothing to do with incentives, and everything to do with the cost of doing business in DC.

We would like to see the District government signal that it is intent on making the District a better, easier, and less expensive place to do business. It can do this with a much more aggressive effort at regulatory reform. It can continue the efforts that were started by the tax revision commission. It can show that it’s capable of doing some of the hard things that are required to improve the business climate.

Every business and every resident would benefit if the District does the things that will make it impossible for Marriott to locate anywhere else.

 

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Why the District government should focus on the reform of its regulatory system is straightforward: as a famous economist recently said, “Regulatory burdens do not exist in isolation. Someone must eventually bear the cost, either through reduced wages, lower profits, or higher prices for every consumer.”

Where to start reform is the simple part. The specifics on how you go about it are not so simple. The underlying goal must be to change the incentives that require regulators to write ever more regulations in order to justify their existence.

The classic quip, “regulators regulate” is classic because it’s true. The job of a regulator is to write rules and enforce them. That’s how they’re paid. That’s how they’re measured. That’s how they’re evaluated.

Cutting Red Tape

With the current set of incentives, a regulator must be in perpetual motion — constantly writing new rules and revising/expanding older ones. Constantly looking for new problems that can be solved with a clever rule.

But what if we changed the way regulators are compensated, measured and reviewed?

Another way of looking at the financial crisis is that we had too many regulators at the SEC, the Federal Reserve and the Treasury writing new rules and not enough of them enforcing the rules already written. The mortgage crisis was a massive regulatory failure, but it wasn’t because there weren’t enough rules.

On the contrary, there were too many rules that were so complex as to make them easy for smart lawyers to pervert, evade or exploit.

What if we transitioned some regulatory personnel from promulgating new rules to the enforcement of a radically revised, reshaped and simplified regulatory scheme?

Instead of being compensated for every new rule you write, what if you were compensated for every piece of red tape you cut, the number of rules you reform and how you reduce the costs of compliance without jeopardizing consumer protections.

We hope you’ll read this seminal article on the fatal flaws of hyper-regulation. There is a smart middle-ground between the Wild West and insanely burdensome regulatory overreach. We’ve got to find it fast.

How Radical Regulatory Reform = Good Government

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“The District’s economy needs to grow at a significantly faster rate in order to create the number and kinds of jobs we’ll need over the next generation. Faster growth is required to increase the incomes of District residents, and we need it to produce the amount of tax revenue we’ll need to do the things the District says it wants to do in areas like affordable housing, homelessness and Medicaid. The research, programs, and initiatives we undertake are short, medium, and long term efforts to facilitate faster economic growth and the job creation that comes with it.” — Dave Oberting, Executive Director

agenda

Our current priorities are:

Economic Growth DC

  1. Regulatory Reform – Reducing the cost and increasing the ease of doing business in the District of Columbia are two of Economic Growth DC’s primary goals. Both the cost and the ease of doing business are products primarily of the regulatory process. Reducing the complexity of our regulatory system and reducing the cost of compliance would provide an immediate boost to economic growth. We will take advantage of every opportunity to move towards a simpler, smarter regulatory architecture.
  2. Regulatory Review & Amendment Act – This bill, as proposed by Economic Growth DC, would require the District government to calculate and weigh the costs and benefits of all regulations expected to have an economic impact in excess of a certain amount. It will add much needed transparency to the regulatory process as many regulations act as a hidden tax on consumers who ultimately bear the burden of those regulations.
  3. Tax Reform — A Tax Revision Commission organized by Mayor Vincent Gray and led by former Mayor Anthony Williams conducted a comprehensive review of the District’s tax framework over the past 18 months. They recommended a number of changes to the tax code that were subsequently adopted into legislation championed by Council Chairman Phil Mendelson. The most important of these changes lowered income tax rates on moderate to middle income DC residents. We believe this should be the beginning of the tax revision process, not the end. Our basic tax philosophy is we should incentivize work by lowering the tax on it. We will advocate in the coming year for more progress on our tax code.
  4. District of Columbia National Disaster Insurance Protection Act – If passed, this federal legislation would empower the District to compete with off-shore jurisdictions to keep insurance company catastrophe reserves in the U.S. by providing tax incentives for such funds to be maintained in the District of Columbia. This legislation would open the door to the creation of thousands of high-paying jobs in the region and billions of dollars in new economic activity.
  5. Economic Fact Sheet – Many business owners and managers have made it clear to Economic Growth DC that they often feel misunderstood and unappreciated by the DC government and residents alike. We believe this is because the business community at-large has not done a good job of articulating the contribution that it makes to the the well-being of District residents. Economic Growth DC created an economic fact sheet for the District that details the contributions that are made annually by the District’s 21,592 private businesses. Click here to view: DC Economic Fact Sheet
  6. Economic Impact  Analysis – Chairman Phil Mendelson included in the council rules a provision for the conduct of an economic impact analysis on pending legislation. It is to be performed by the Council’s budget office. This is an excellent first step, but this analysis should be codified into law for both legislation and regulations. Having a better understanding of what individual laws and regulations cost the economy in terms of lost economic activity and slower job growth is the foundation of a good legislative and rule making procerss. We have proposed a Regulatory Review Act that would require the Chief Financial Officer to conduct an economic analysis on any proposed regulation over a certain dollar value that would calculate the cost that a particular regulation would impose on the private economy. It would also allow for a retrospective review and amendment process for older regulations. This law could easily be expanded to include legislation.
  7. Labor Law Changes — The District’s labor laws contain perverse incentives that encourage District businesses to relocate to the suburbs upon reaching a certain size and a certain number of employees. We’d like to work with the Council to reform our labor law system to make it more competitive with Virginia and other parts of the country. These reforms will be especially important as the technology start-ups the District has invested so much in begin to mature and start hiring serious numbers of people. These changes can be made at very little cost to the District and without sacrificing important employee protections.
  8. Land Transfers — The District should seek out more opportunities to acquire unproductive federal lands, develop them, and reap the tax benefits of increased economic activity.
  9. Improving Access to Super Fast Internet – Google has said it will provide fiber optic speed internet access to any jurisdiction that deregulates access to fiber. Making the appropriate changes is likely to jumpstart the installation and adoption of fiber optic speed internet access. Higher speed internet access increases employee productivity. Increased productivity is a prerequisite for faster growth.
  10. Fostering Micro-Manufacturing — The District has historically been locked out of the manufacturing industry due to high real estate costs and lack of space. There is a new industry taking shape that would allow the District to become a specialty manufacturing center in its own right. Micro-manufacturing, using 3D printers, is the fastest growing form of manufacturing in the country. They are largely small businesses who’ve used this amazing technology to make a wide variety of products. We’d like to propose legislation that would clear out some of the regulatory and zoning barriers that would enable this industry to take root and prosper in the District. 3D printer technicians do not need a college degree and the jobs generally pay $15-20 per hour. We should be moving quickly to establish a legal and a streamlined regulatory framework for fostering the growth of this industry.
  11. Science and Engineering Campus – The District intends to become the premier technology center on the east coast. If you look at the other tech hotbeds around the country — Silicon Valley, Boston, and Austin — the one thing they all have in common is a massive research institution like Stanford, MIT, and the University of Texas.  These institutions produce not just the technology graduates that start companies, but the technology itself that can be commercialized.  The City of New York and Cornell University have partnered to build a massive technology campus on Roosevelt Island in NYC. Mayor Michael Bloomberg called it easily the best tool NY will have for accelerating future economic growth. A smaller version of idea has been proposed for St. Elizabeth’s, but the District should think bigger. It should involve a name-brand research partner like Stanford, Carnegie-Mellon or Georgia Tech.
  12. Crowdfunding — This technology provides important access to capital for District start-ups and small businesses. The District has proposed rules to govern crowdsourcing transactions. We’ll work to see these rules implemented as quickly as possible.
  13. Attract Venture Capital Firms — Increasing the amount of venture capital funding that flows into the District is key to our long-term growth. The District is actively fostering early stage technology firms with investments in things like 1776. Our startup community is moving towards a critical mass of invest-able companies, but we won’t attract significantly more venture funding if the people who make those investments are not physically in the District. We’ll be proposing an incentive package to entice the largest venture firms like Kleiner Perkins, Andresssen Horiwitz, Sequoia and Graylock to set up shop in the District proper.
  14. Anacostia River — We support the efforts of the United for a Healthy Anacostia River Coalition — Lack of development on the banks of the Anacostia is the most visible effect of the deadly chemicals that have been poured into the Anacostia for decades. We consider the cleanup of the Anacostia to be an important economic initiative. We will help the Coalition wherever we can.

Economic Growth DC Foundation

  1. Code4Life — Is an after-school program created in partnership with technology giant Accenture that teaches DCPS  and charter school middle-school students basic computer programming. The program is designed to put District students on a pathway to a high-wage occupation that does not necessarily require a college degree. The program launched successfully at KIPP NE Academy this fall. We are currently planning our expansion to three additional schools in February.
  2. Re-entry Job Placement Program — The Foundation is working on the development and implementation of an ex-offender job placement program similar to one that was originally developed in Newark, NJ through a partnership between Mayor Corey Boooker and the Manhattan Institute. The Newark program has experienced real success with its rapid attachment to work job placement model designed to get returning citizens into the workforce quickly. They have experienced a much higher employment and retention rate than typical ex-offender efforts, as well as lower rates of recidivism. At his point, it looks like the program will require substantial private funding.
  3. Decriminalization – The District decriminalized marijuana in 2014. That action should be the beginning of a sustained campaign to reduce the over-criminalization of DC’s civil society. We will advocate for the formation of a commission which will be responsible for making recommendations for the reduction of certain felonies to misdemeanors, and misdemeanors to civil infractions. Over-criminalization is not unique to the District. At the federal level, there are over 3,000 criminal offenses, and over 300,000 regulations that carry criminal penalties. This is a phenomenon at both the local and national levels that should be rolled back.   
  4. Modern Entrepreneurship Program – This program is essentially a venture capital fund for minority micro-entrepreneurs. The twist is experienced business professionals associated with two U.S. AID contractors with considerable development experience overseas will embed with these entrepreneurs for up to a year. The intensive management assistance is designed to lower the risk profile of these investments. This program also requires private funding.
  5. Leadership Development Training Class — In partnership with the DC Leadership Development Council, the Foundation seeks to launch a high-school level leadership development training class for high-potential students at DCPS high schools. This class is scheduled to begin in the fall of 2014. The Foundation will administer and underwrite the program. The DC Leadership Devel0pment Council will assemble the curriculum and and provide the instructors.
  6. Job Placement Coordinator Training – The District provides the bulk of its job training and youth development programs through non-profit social service providers. Each of those providers has at least one person that is responsible for placing their program’s graduates into jobs upon completion of that training. The Foundation uses its private sector job placement expertise to offer free instruction to any of these placement coordinators interested in professional development. This training helps placement coordinators become more effective at what they do, thereby increasing the number of people who are placed into jobs at the conclusion of their training.
  7. Research – We are currently seeking a Director of Education Policy. This individual will be responsible for organizing and analyzing education policy research that is of interest to EGDCF, as well as conducting original research focused on blended learning and improving educational outcomes. If you would be interested in being considered, please forward your resume to resumes@egdcfoundation.org.
  8. Apprenticeships – The Foundation is working with several partners, including organized labor, to implement a much broader use of apprenticeships. Germany is an excellent example of how to use apprenticeships aggressively to provide higher levels of skill. Apprenticeships are not just for the construction trades. There are dozens of professions ripe for the use of apprenticeships.
  9. Office of Military Preparedness — The military is an excellent career opportunity for District youth. We will be encouraging DCPS to open an Office of Military Preparedness to coordinate the efforts of the various junior ROTC programs, as well as with the various military recruiting commands. The military should be given greater access to students and guidance counselors.

For more information on the Foundation’s activities, visit its website at http://egdcfoundation.org.

 

 

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To no one’s surprise, poverty is not spread evenly throughout the District of Columbia. Only six percent of the District’s white residents live in poverty. For Hispanics, the rate is 23% and for African-American District residents it’s 39%.

The most important statistic in all of the poverty debate is this one: according to Dr. Harry Holzer of the McCourt School of Public Policy at Georgetown University, of the 88,773 people over the age of 16 living in poverty in DC, only 1.9% had a full-time job at some point throughout the year, while 64% did not work at all.

The District doesn’t have a “poverty” problem, per se. It has an unemployment and underemployment problem, of which poverty is a symptom.

The elusive “solution” to poverty is actually pretty obvious: work — meaningful, decent, and full-time work to be sure, but work itself is how poverty ends.

Our public discourse tends to trend towards who’s to blame for the existing state of affairs, but the causes are many, varied and ultimately irrelevant. The only thing that matters is how it gets fixed.

Deep Poverty

Our answer comes in three parts that are not a mystery:

1) The District’s economy contracted by 0.5% in each of the last two years. Should that trend continue, you have a prescription for disaster. The number one task of the new administration, and the thing that most requires their attention is implementing a policy framework that permits the private sector to grow faster. This can and should be fixed in the short-term. Improvements in tax policy, regulatory policy, more flexible labor laws and even the facilitation of the birth of new industries are within reach. Aggressive moves in each area are required to jump-start the creation of jobs at all skill levels.

 

2) Too many District residents lack the skills required to acquire and maintain a full-time, middle-skill, middle-wage job. This is a medium-term project, but the best tool we have for transmitting the skills that District residents need to command a middle-class job is our long neglected workforce development system. It is frankly the best anti-poverty tool we have.

Some improvements in the system have been made over the last four years, but we need to move farther, faster. Instead of complaining that the workforce is unskilled, the corporate sector needs to drive the design of, supervise, facilitate, and to some degree, fund an improved job training system. As the pace of  job creation increases in the short-term it places a higher premium on residents with competitive skills.

 

3) As a longer-term proposition, we need a more radical reconstruction of our K-12 education system. Dating back to Mayor Fenty’s takeover of the schools and the tenure of Michelle Rhee, the energy required for dramatic improvement has been there, but the results have not. According to Ken Archer of Greater Greater Washington, if you take a closer look at the city’s test scores, you see, “stagnant or downward trajectory for black, Hispanic, low-income, English language learner, and special education students in the last five years.”

This is a recipe for the perpetuation of inter-generational poverty. Until the city grapples with this reality and commits to more drastic action, the long-term trajectory of poverty will not change. By the time a faster growing economy is producing more jobs,and an improved workforce system is producing higher-skilled District residents, we must graduate 100% of our high school students and they must be ready for post-secondary training/education and a productive career.

Throwing more money at a broken system is the definition of insanity. We need a fundamental shift in the way we approach poverty. Work, work-readiness and work supports represent the future of our anti-poverty efforts.

 

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Attached below are the public comments on the proposed merger of Exelon and Pepco submitted to the Public Service Commission by our executive director Dave Oberting, as well as a link to an op-ed he wrote in support of the merger. There is no compelling reason to prohibit the merger. Exelon is the lowest, by far, emitter of CO2 among the 25 largest power companies in the U.S. To the extent that Pepco will have the opportunity to introduce more low carbon energy into its energy mix, the merger is a net gain for District consumers, District businesses and the environment.

Economic Growth DC Exelon-Pepco Proposed Merger Comments — Public Service Commission of DC

Viewpoint: Hot Air Over Pepco Merger

Over the longer term, Economic Growth DC is on record as being in support of Space Based Solar Power as the best solution to our energy, climate and national security difficulties. This technology is about 30-40 years away and will cost in the neighborhood of $2 trillion. It will be driven first, as most things are, by military necessity. It will then be commercialized as a joint venture with private energy companies of all kinds.

CNN Space-Based Solar Power Article

 

 

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It’s a legitimate question.

After all, some people have done a pretty good job of turning “corporation” into a dirty word. And some companies brought that on themselves. Especially large financial institutions that played Russian roulette with the mortgage market. But the vast majority of private for-profit and non-profit enterprises in the District are small ones that were battered by the great recession only to be slammed again with a two year’s and counting local recession.

Even against these headwinds, the private sector contributed $22.5 billion to the well-being of District residents in 2013. The attached economic fact sheet tells the story. The next time you’re at your corner market, consider saying thanks.

DC Economic Fact Sheet

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Proposition

Here is the proposition that underlies all that we do at Economic Growth DC: the right to a decent full-time job is the most basic and fundamental entitlement of them all. It is the cornerstone of social justice. It is the foundation of human dignity.

We often forget that the full name of Dr. King’s pilgrimage to the nation’s capital in 1963 was the “March on Washington For Jobs and Freedom.” Was it simply a typo that Dr. King put jobs before freedom in the title of his speech, or was it a conscious ranking of his priorities?

What would Dr. King think if he found out that 50 years have passed, and in the city where his march was held, 88,773 people (out of a population of 658,000) over the age of 16 still live in poverty? And how would he feel if he heard that only 1.6% of them had the opportunity to hold a full-time job at some point in the last year.

Every day that goes by that a District resident doesn’t have the opportunity to work full-time is another day that our local government has failed that resident.

For it is the District government that bears responsibility when the economy slows, and job growth sputters. Our elected officials hold the keys to the legal and regulatory structures that permit an economy to function. When that architecture fails, it is not the fault of the man on the corner searching for the means to feed his family.

March On Washington

 

Our Promise

We’ll work every day, with every tool at our disposal, to bring you a faster growing economy capable of creating a full-time job for every working-age District resident.

We’ll work every day to radically improve our job training system so that it imparts the skills that District residents need to command the high-wage jobs of the next generation.

We’ll work every day to urgently and dramatically improve our K-12 education system so that by graduation every District student can think critically, solve problems, communicate effectively, and collaborate as part of a team.

And we’ll work every day to make sure that every 12th-grader is prepared for a four-year college program, a technical training program, an apprenticeship, or in special cases, a good-paying job in the local economy.

Full-time job grunge blue vintage round isolated seal

 

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The District’s economy contracted by 0.5%, or approximately $500 million, in each of the last two years. While sequestration and a generally tight federal budgetary environment have reduced the contribution the federal government normally makes to the District’s economy, our research indicates that the primary cause of the decline in economic growth has been a general lack of confidence on the part of the people who make hiring and investment decisions in the District.

Business Confidence Graphic

Economic Growth DC will be unveiling a mechanism for measuring business confidence in the District in the first half of 2015 called the DC Business Confidence Index (DCBCI). It will be a composite of multiple economic indicators such as retail sales, housing starts, business licenses issued, bankruptcies, venture capital invested, unemployment and a number of other monthly indicators. The Index will be scored on a scale of 1 to 100 with 50.1 and above indicating expectations of economic expansion. It will be published quarterly starting in the third quarter of 2015.

Our research further indicates that the lack of confidence is primarily the result of the perception on the part of business owners and managers of a difficult business climate. We hear this repeatedly in our discussions with people who own, manage, and conduct business in the District.

The business climate, also expressed as the cost and the ease of doing business in a particular jurisdiction, are primarily products of the regulatory system. The District, while not alone in having a difficult regulatory environment (see this article for an overview of the U.S. regulatory climate: Download PDF — Daily Beast-Philip K. Howard on the Need for Radical Regulatory Reform), has had years of hyper-regulation that have made the costs of compliance, in terms of both time and money expended, very difficult for all but the largest of businesses. This time and expense spent on compliance is time and money not spent building a business and hiring new employees.

There are tremendous growth opportunities available to the District in terms of making the city a better, easier and less expensive place to do business. The benefits of these changes will flow through the economy to every DC resident in the form of better services and lower prices, but they can only be realized if the new administration is willing to commit to reforming the District government itself in almost every respect.

One of the best ways to begin the process of reforming the regulatory system is to have a detailed understanding of how much your existing and proposed regulations cost the broader economy in terms of lost economic activity and job creation. These are factors that can be measured and Economic Growth DC has proposed a bill, called the Regulatory Review and Amendment Act of 2015 that will help District policymakers understand the economic costs that an individual regulation will or has imposed on District residents and businesses.

See a draft of the proposed legislation here: DC Regulatory Review Act Draft 1.

Changed Priorities Ahead

The level of reform that’s required to push the District’s economy closer to realizing its potential for growth is enormous. It will be a time and manpower intensive effort that will stretch for years, but it is undoubtedly the best opportunity the District has for achieving the robust economic growth that the District’s most vulnerable residents need to achieve a modicum of economic security.

Growth doesn’t solve every problem, but without it we solve none of them.