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The DC Economic Growth Action Fund, more commonly known as Economic Growth DC, has been granted its letter of exemption from federal income taxes. The letter is dated April 11, and is attached below. It was a long and arduous task (not to mention expensive), but it is now done. If you’ve been holding off on making a contribution until we received our designation letter, it is now safe to donate.

You can contribute online at http://economicgrowthdc.org/donate or click on the contribute button at the top of this page if you are already on our site. You can also mail a check made out to Economic Growth DC to 1130 Connecticut Avenue NW, Suite 350, Washington, DC 20036.

Thanks to all of our supporters for the immense contributions you’ve made towards our success, financially and otherwise.

Section 501(c)(4) Exemption Letter

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In short, Economic Growth DC’s theory of poverty and inequality is that both are symptoms of the disease, but the disease is unemployment and underemployment. Another way of putting it is the one thing that all of the adults in the District of Columbia who live in poverty have in common is they are either unemployed or underemployed — if you define underemployed as either working part-time or working full-time for low wages. Consider this:

The poverty rate in the District of Columbia for African-Americans is 39%, for Hispanics it’s 23%, and for whites it is 6%. The vast majority of the people who live in poverty in the District live in Wards 5, 7 & 8.

The real unemployment rate in those wards, known officially as the U6 unemployment rate, which measures the number of people who are unemployed and actively looking for a job, plus the people who are working part time involuntarily, plus the people who have given up looking altogether out of frustration — is approximately 35-40%. Our key observation is that the true unemployment rate in the predominately African-American parts of the District is almost identical to the African-American poverty rate and that is not a coincidence.

To further illustrate the situation, consider that as of 2010 the District of Columbia had 133,000 residents who lived in a family where the head of that household earned 150% of the poverty line or less. That’s nearly 25% of DC’s population. A majority of those families contain an adult who worked at least part-time. A third of them live in families with an adult working full-time. These facts align with our theory of poverty. Two thirds of the adults in the District’s low income families do not work full-time, and the third that does works for low wages — fitting our definition of underemployed.

The antidote for this problem, and the key to eliminating poverty is work — creating the number and kinds of living wage jobs required, and making sure our workforce is properly educated and trained to take advantage of those opportunities.

If you buy into the idea that poverty (and inequality, which stems largely from poverty) is predominately a function of lack of work, then the vast majority of the District’s anti-poverty efforts and financial resources devoted to fighting poverty should be re-oriented around job creation, incentives to work, work readiness, work supports and work itself. We quite literally have to work our way out of poverty.

 

Changed Priorities Ahead

 

Here are some things to think about:

  • Job creation — slowed dramatically in the District in 2013. The single most important thing District policymakers and the District government can do is create conditions that are conducive to faster economic growth. Only a faster growing economy will create the number and kinds of jobs we need to address what is really an unemployment crisis.
  • Job training — The District has a mixed record in terms of providing meaningful and effective job job training. One of of the primary problems is we don’t know if we’re training for the right jobs. Georgetown University’s Center for Education and Workforce is capable of analyzing which living wage professions are growing in a given region. Once we know what we’re training for, we can focus on making that training as employer driven and effective as possible.
  • Education – Improvements to student achievement come too slowly. We cannot afford to wait twenty years to get our young residents to full proficiency and living-wage job ready.
  • Technical/Vocational Education – This is underutilized in the District as are apprenticeships. Only about 35% of the jobs created in a given year require a four-year degree. There are many, many living wage jobs available that don’t require a degree, but they do require some kind of post-secondary technical training or certification. We must do a better job of matching residents to these professions.
  • Work Incentives — Many unemployed and underemployed District residents face extraordinarily high marginal tax rates when their income rises beyond a certain threshold. Certain benefits are phased out abruptly as income rises. In many instances, the rational move is to stay underemployed rather than take a small raise and lose benefits. We must overhaul the incentives to work. The best way to do that is to lower the tax on it. We also have to figure out how to taper public benefits more slowly as a person’s income rises.
  • Work Supports – In a social services regime oriented towards work, the District government must provide supports for lower income residents as they prepare and train for higher skill work. Work supports include things like transportation and child care. If these supports are always pointed towards helping a residents obtain and maintain a full-time, living wage job, it is money well spent.
  • Barriers to Work – A significant portion of unemployed/underemployed residents face substantial barriers that make it difficult to obtain and a maintain full-time job. Some of these barriers include literacy issues, poor education, drug and alcohol issues,  as well as mental and physical health issues. It is up the the District and its non-profit social service provider partners to remove as many of these barriers as humanly possible to give each resident their shot at upward mobility.

 

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People sometimes ask what it is exactly that we do on a daily basis. If it’s not clear, then we aren’t doing a very good job of communicating our agenda. As far as our overall objectives are concerned, our basic premise is that the District’s economy must grow significantly faster in order to generate the amount of tax revenue the District needs to do the things it says it wants to do in areas like affordable housing and Medicaid. It also needs to grow considerably faster in order to create the number and kinds of jobs required to dramatically reduce the real unemployment rate in the areas of the District where it’s unacceptably high. The research, programs, and the initiatives we undertake are short, medium, and long term efforts to facilitate faster growth and the job creation that comes with it.

agenda

Here is a list of our current priorities:

Economic Growth DC

  1. 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 investment if the people who make those investments are not physically in the District. We’re 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.
  2. 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. Verizon has been attempting to install Fios for years. We think they need some help in the form of some friendly competition. We have proposed revisions to our telecommunications regulatory structure to make DC a more competitive broadband market.
  3. Labor Law Changes – If you talk to an entrepreneur whose company is growing fast, the real reason they often feel compelled to leave the District is because of its labor law regime. When you reach about 200 employees, your people become both your biggest asset and your biggest liability. That’s when Virginia becomes so attractive. We will be proposing a series of changes to our labor laws to make them more competitive with Virginia and other parts of the country. This will be critical to retaining the startups we’re fostering when they start to add a serious number of employees. This can be done at very little cost to the District and without sacrificing important employee protections.
  4. Tax Reform – We will be advocating on behalf of revisions to the DC tax code recommended by the Tax Revision Commission. We would to see policymakers take the commission’s recommendations even further in an attempt to be more competitive in the region.
  5. Regulatory Reform Task Force – We expect to lobby in favor of changes to our regulatory system designed to make DC a better, easier and less expensive place to do business as they are released by the regulatory reform task force that has been meeting regularly over the last year.
  6. 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 are proposing legislation that would clear out some 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.
  7. 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 — they all have one thing in common is a massive research institution like Standford, MIT, and the University of Texas — that produces not just technology graduates, but technology itself that can be commercialized. A similar idea has been proposed for St. Elizabeth’s but it has to be a must bigger endeavor to meet our needs. And it should involve a name-brand research partner like Stanford or Carnegie-Mellon or Georgia Tech.
  8. Crowdfunding – The District should make the regulatory changes necessary to open up real estate and other projects to small investors via crowdfunding.
  9. Small Business Focus Group – We are in process if putting together somewhat of a coalition of small businesses that will coordinate on issues of particular interest to small businesses like the minimum wage and the cost of health insurance. We should have an announcement on that in the next couple of months.
  10. Passive Income Exemption – There are no hedge funds, private equity firms, nor venture capital firms headquartered in the District. This stems from an anomaly in the tax code that needs to be fixed. We are working with a couple of organizations to provide a legislative remedy which will make the District much more attractive to financial services firms.
  11. 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 intend to help the Coalition wherever we can.
  12. Small Business Survey – We are in the process of constructing a survey that we plan to ask small business owners to complete to highlight current economic conditions in the District for small businesses and the  public policy challenges they face. We have begun the process of identifying the small business owners we’d like to target and we’ve begun formulating the questionnaire.
  13. Putting Together Advisory Board — We made provisions in our bylaws for an Advisory Board in addition to our board of directors. We have begun the process of recruiting candidates from various facets of DC economic life.
  14. Fundraising — Our professional fundraiser recently completed our fundraising strategy document for us and a donor prospectus. We have begun to implement the strategy and a copy of  the fundraising prospectus can be found here: 2014 Economic Growth DC Local Prospectus – HD. If you would be interested in supporting our efforts, click on the Contribute button at the top of this page.

Economic Growth Foundation

  1. 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 improving educational outcomes. If you would be interested in being considered, please forward your resume to resumes@egdcfoundation.org
  2. Code4Life — Is an after-school program created in partnership with technology giant Accenture that will teach DCPS  and charter school middle-school students them basic computer programming. The first class will take place in  the fall of 2014. We are currently working with Accenture and Girls Who Code on the curriculum and the training of instructors.  The Foundation will manage and administer the program and provide the funding. Accenture will provide the instructors for the classes. The program will launch at Eliot-Hine Middle School on Capitol Hill.
  3. Leadership Development Training Class — In partnership with the DC Leadership Development Council, the Foundation will be launching a high-school level leadership development training class for high-potential students at Eastern High School. 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.
  4. 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. The Foundation will use its expertise its private sector expertise in the field of executive search and job placement to offer instruction to each of these placement coordinators. This training will be help these 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. We are currently looking for a training manager and the funding to underwrite this program.
  5. DCPS Debate Tournament — In partnership with the DC Urban Debate League, the Foundation will organize a debate tournament for DCPS and charter school students in September of 2014.
  6. Early Childhood Education Program – We are currently investigating potential programs for this age cohort. If you have any suggestions, please email programming@egdcfoundation.org.
  7. Elementary Age Program – We are also studying various options for programs designed to improve student achievement at DC elementary schools.
  8. Post-Secondary Program – We are investigating programming in this area. We are interested in strategies for providing post-secondary skills development for graduating seniors and transitioning them into the local workforce as quickly as possible.
  9. Re-entry Program — The Foundation is proposing the implementation of a prisoner re-entry system 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 re-hire program designed to get returning citizens into the workforce quickly. They have experienced a much better employment and retention rate, as well as lower recidivism. In an average year, 8,000 individuals return to the District from incarceration. The District’s Office Of Returning Citizens Affairs provided at least one service to 5,100 returned citizens in fiscal 2013. This is laudable, but only 152 were placed into employment due directly to ORCA’s efforts. That’s a 2.9% percent placement rate. There is much room for improvement. We are working with partners towards an attempt to replicate’s Newark’s success.
  10. Support Work Place DC — Work Place DC is an innovative idea for bringing together a group of non-profits that provide job training and other workforce development services under one roof. This would allow them to pool their resources and share back office functions. It will allow them collectively to provide a broader range of workforce services more effectively. The program is designed to be conducted in collaboration with the District government. It is our hope that representatives from various DC agencies will co-locate at Work Place DC. The Foundation is working with the Jovid Foundation to help formulate Work Place DC’s business plan, and we intend to help them find a suitable facility and get their program implemented.
  11. Fundraising — All of these efforts require financial support from interested individuals and institutions. EGDCF is a 501(c)(3) charitable foundation. All contributions are fully tax-deductible as charitable gift. If you’d like to support the foundation or any specific individual program, CLICK HERE. If you are already on our site, click on the “Contribute” button at the top of this page.

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

 

 

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As the attached Congressional Budget Office report makes clear, increasing the minimum wage increases the cost of a minimum wage worker and induces a reduction in labor utilization. Essentially, an increase in the minimum wage is a tax on the employers of minimum wage workers. It could also be classified as an unfunded mandate.

Tax cuts are supposed to be paid for. The inverse should also be true. An increase in the minimum wage should be required to be accompanied by a corresponding decrease in some other operating cost, whether that be a reduction in a business tax, or the removal of a regulatory burden that carries a quantifiable cost. An increase in the minimum wage should be cost neutral.

The District will be raising the minimum wage to $11.50 per hour in the next couple of years. For many District employers, that is a serious burden. We’d like to hear from business owners and managers on some ways they’d like to see the mandated increase in labor costs offset. If you are a business owner or manager, fill out the short form below to tell us how you’re planning to handle the increase and give us your ideas on how these costs can be offset.

CBO Minimum Wage Report 2-14

 

Employer Survey on the Minimum Wage Increase

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“For New York City, the establishment of top-tier applied sciences and engineering campuses is a once-in-a-generation opportunity to dramatically increase our potential for economic growth.” — Michael Bloomberg

Mayor Bloomberg hits it right on the head. A major technological institute is not an ego play, or a real estate development, it is the primary catalyst for increasing the rate of economic growth and the job creation that comes with it in New York City.

On December 13 of last year, he, Cornell University President David Skorton, and Technion-Israel Institute of Technology President Peretz Laview signed a 99-year lease that will transfer 12 acres of Roosevelt Island to Cornell Tech — making way for construction of the city’s new applied sciences and engineering campus to begin in January. If it looks like a sweet-heart real estate deal, think again, it’s actually a massive investment in the future of New York City’s technology industry. DC needs to emulate this investment as quickly as possible.

NYC Tech Campus Rendering

 

New York’s economy is more dependent on Wall Street’s financial industry than DC’s is dependent on the federal government. This project is Michael Bloomberg’s long-term initiative to reorient New York’s economy away from Wall Street and towards technology, just as DC is attempting to reorient its economy away from the federal government. New York engaged in a competitive bidding process for the right to build this massive technology enterprise. Cornell/Technion was ultimately selected because of, “the large scale and vision of their proposal.” The campus is schedule to open in 2017.

The District has made some important strides in the last 5-10 years as it relates to its own tech industry, but it still lacks the fundamental asset required for the sector to explode locally — a critical mass of talented software engineers, software developers and other technology professionals. Cornell Tech will create that pipeline.

If you really want a technology industry to flourish, a top flight research institution is a prerequisite. Look at the major technology hot beds around the country and see what they all have in common:

  • Silicon Valley — Stanford
  • Austin, TX  – University of Texas
  • Boston — MIT
  • Research Triangle Park, NC — UNC, NC State, Duke, Wake Forest
  • New York — The new Cornell Tech
  • DC — ????

These institutions produce the human capital and the technology that’s required to spin out large numbers of technology startups. Google was started while its founders were both students at Stanford. There is no path to making DC the largest technology center on the east coast that does not start with a major research institution.

Cornell Tech Website

About Cornell Tech

 

 

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As this Washington Post article indicates, the Horseshoe Casino in downtown Baltimore is in the midst of hiring 1,500 people to staff its new facility. Some 500 of those positions will be for full-time dealers who earn as much as $55,000 per year. The idea of a downtown DC casino should be on the table.

The Employment Case – Two to three thousand construction jobs for as many as three years; 1,500 permanent positions, including hundreds of dealer positions paying middle-class wages. Very few of these positions require a college degree.

The Competitiveness Case – In two years a $1 billion casino will open within 15 minutes of DC at National Harbor. Thousands of people who would have stayed in District hotels will now stay at National Harbor and simply come to DC for the day. This represents the loss of millions of dollars in economic activity and tax revenue.

The Economic Case – Maryland Live collected $586 million in gross gambling revenue in 2013. The District has very few $586 million businesses that pay a special, higher, tax rate on their earnings.

The Fiscal Case – Maryland Live contributed $213 million in gaming taxes to Maryland’s education trust fund in 2013. I’m not aware of a single DC politician who would say no to $213 million in new, annual tax revenue.

The Case Against – Is purely moral. There are some who think gambling is somehow inherently evil and that it brings with it ancillary crime. We’ve seen a gambling experiment in action across our border with Maryland for several years now. We see no evidence of increased crime, or gambling addiction. It turns out casinos on the Las Vegas strip are making more money with their hotels and other services, than they are with gambling. It’s also become a family destination. This gives every casino a built-in incentive to stay clean and hospitable.

We would like to encourage the Gray administration to study the matter, especially its economic and fiscal implications. We’re not saying we’d be in favor of a DC casino in all circumstances, but it’s definitely something that should be on the table in terms of economic development and job creation.

http://wapo.st/1ejRAIs

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By Dave Oberting

We at Economic Growth DC tend to focus only on issues and public policy related to the District of Columbia, so we rarely write about issues that are strictly national in scope. However, when something gets said or written about a national issue that is so wrong and so far off base, we feel compelled to respond. The notion of the death of American exceptionalism is just such a topic. America’s place and role in the world impacts every DC resident so we’re going to to explain some things to some pundits.

The proximate cause of our compulsion to respond was a column on the Think Progress blog by Ruy Teixeira of the Center for American Progress on February 28th. The title of his column was “Cheering the End of American Exceptionalism.” It turns out Teixeria’s piece is actually just a less sophisticated rehash of the arguments Peter Beinert made in National Journal on February 2nd in a column entitled “The End of American Exceptionalism.” Since Teixeria uses Beinert’s arguments, consider this a response to both.

Their primary claim is that American exceptionalism is dead or dying fast and they use three arguments to make it: a decline in religiosity; a decline in the belief that America should act overseas to promote freedom and democracy; and a decline in social mobility. All of these arguments are wrong, but their primary flaw is a misunderstanding of what American exceptionalism really is and how it came about:

Americans are not special because of who they are, but because of where they live. Highly driven, motivated, and innovative citizens are a fixture of the American character, but it is our geography that makes us exceptional. Thus, American exceptionalism is more a quirk of fate than conscious design.

We are a country separated from the world by two massive oceans, rendering us virtually un-invadeable, so we’ve never had to invest massive resources in securing the homeland. We also possess the largest piece of contiguous, highly-productive farm land in the world, so we’ve never really had to worry about feeding ourselves. We also have more navigable, interconnected rivers and waterways than the rest of the world combined, making it easy and cheap to move goods for internal consumption and trade. Truthfully, whomever ended up controlling the Mississippi River basin was destined to be a dominant world power. It just happened to be us. Stratfor calls it the inevitable empire.

The origins of American exceptionalism were shaped by geography not men, and America will always be exceptional because that geography gives us inherent advantages that are not going away. We can certainly fail to make use of them, but they’ll always be there. The term  ”American exceptionalism” is really short-hand for, and maybe an obnoxious way of illustrating America’s unique role in the world, but it is a geopolitical reality. We really have no choice but to lead.

And since we emerged unscathed from World War II and created a post-war international framework suited to American preferences, the rest of the world has benefited enormously from that system every day. From access to the largest consumer market in the world to the American military’s security umbrella, over two billion people have been lifted out of poverty as a result of the system we created and our pursuit of freedom and democracy.

Many countries act as if they’re appalled by American hegemony, but if you sat their leaders down and privately asked them about their greatest fear, it would be a world without strong American leadership.

The authors quote statistics about declining church membership and then attack their own argument by observing that a large group of the people who’ve dropped out of organized churches still have a personal relationship with God. The country is only marginally less spiritual than it was 200 years ago, but that matters not because religiosity has never been central to American exceptionalism.

America’s interventions in the world and interactions with outside powers have always been driven by perceptions of geo-strategic necessity, not religion. Has America tried to spread democracy and freedom? Sure, but never once has it attempted to impose a religion at the point of a gun..

Teixera wrote that “Once, Americans saw their country as freedom’s apostle, burdened with a duty to set the world on the path to righteousness.” Putting aside the mocking and gratuitous allusion to religious imagery, this is a misunderstanding of America’s intentions, and a misrepresentation of its actions.

There is no doubt the American people are war weary. Thirteen years in Afghanistan will do that to you. Plus, the American people have always had an isolationist streak. As the winds of war blew through Europe in the 1930′s, a majority of Americans thought it was someone else’s problem.

It was only the attack on Pearl Harbor that left us no choice. But when America has been truly threatened, the American people have supported a muscular response. The current American mood is but a temporary phenomenon. It lasts only until the next crisis.

Finally, we come to the 3rd argument,  issues of upward mobility and income inequality. Include poverty in the mix and you’ve isolated pretty much all that ills America. We agree these are major problems, but we’ve been looking at them the wrong way. Poverty and income inequality are not problems unto themselves. They are a function of unemployment and underemployment.

Of the people who live in poverty in the U.S. in 2014, the vast majority of them are either unemployed or underemployed (defined as working involuntarily part-time for low wages). The United States does not have an upward mobility crisis, it has a full-time, living wage jobs crisis. At the same time, it has a lack of a properly educated and trained workforce crisis.

With all that said, it seems the real problem for the authors isn’t so much American exceptionalism itself, as it is the misguided politicians and pundits who publicly pontificate about it constantly. We agree with them on this. Allies and adversaries alike know full-well that America is exceptional.

They just have to look at the chart below. They know we are the only nation in the world capable of projecting power at-will anywhere in the world. They know we spend more on defense than most of the rest of the world combined. There’s no need to constantly remind them. Like Lou Holtz once told his football team, “When you score a touchdown, just hand the ball back to the ref and act like you’ve been there before.” We can score at will, there’s no need for an end zone dance.

Top 20 Defense Budgets

 

Dave Oberting is the Executive Director of Economic Growth DC, a political and economic policy research/advocacy organization focused on the District of Columbia. Follow them on Twitter @Growth DC.

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The idea that the world is on the verge of some kind of catastrophic overpopulation crisis is a myth popularized in a 1968 book, The Population Bomb, by Paul Ehrlich of Stanford University. The truth is actually closer to the opposite of his theory. Birthrates in most of the developed world have already fallen below the replacement rate (2.1 children per woman). The birthrate in the United States has dropped below the replacement rate for the first time since the financial crisis, but the U.S. is in much better shape than most countries, emerging or developed.

Japan and Russia have the lowest birthrates in the world and their societies are slowly aging and shrinking. China has its one child policy. Birthrates in India and other developing parts of the world are also slowing. The reality of the global population situation is much different from what is commonly believed. We are actually moving toward a population shortage…

Fertility Rates Certain Countries

In the United States, the baby boom generation is beginning its move into retirement. That represents 70 million Americans (the largest cohort of Americans in the country’s history) headed out of the workforce and into retirement. As more and more seniors begin drawing Social Security and Medicare, the strain already seen in those programs will become more pronounced.

The generation behind the baby boomers, Generation X, is made up of about 40 million people. As the chart below documents, the ratio of workers to retirees has declined from 41.9:1 in 1945 to 2.9:1 in 2010. It is projected to drop even further as the pace of boomer retirements accelerates. Sometime soon, there will not be enough workers paying into the entitlement system to support those drawing benefits.

worker-per-beneficiary-chart-580_1

This irrefutable fact renders our entitlement system as it now stands unsustainable. We will be forced to raise taxes significantly, cut benefits significantly, or both. The only way to avoid this fate is to dramatically increase the number of working age U.S. residents paying into the entitlement system.

The U.S. needs a huge influx of high-skill, mid-skill and even low-skill immigrants. And this occurs at a time when net migration to the U.S. is declining. Some of tha decline stems from the poor economic recovery, some from better opportunities in immigrant’s home countries, and some from stricter border enforcement. Whatever the cause, the result will be a move, over the next twenty years, to a posture of actively recruiting immigrant labor. In the case of high-skill workers, that will include cash bonuses for moving to the U.S.

It’s hard to say exactly how many workers we would have to import to make our entitlements solvent, but for sure it will be many millions. But it is here that America’s inherent advantages come into focus. As the chart below indicates, we integrate immigrants into our society far better than any other country. We have integrated huge waves of immigrants throughout our history and it is time to prepare for another one.

Immigrant Integration Indiex

Comprehensively reforming our immigration system to prepare for an orderly recruitment and integration process is not just good policy, it’s a strategic imperative. We should start where there’s most agreement: we must increase the high-skill immigration by an order of magnitude.

We should remove the cap completely on the H1-B visa program. Likewise, every foreigner who completes an advanced degree in the U.S. should be automatically cleared to remain in the country. Then we should create a program for actively recruiting scientists, engineers and other high skilled technology talent. Those recruits will have the highest ratio of taxes contributed to services used. But we will need millions of low-to-mid skill workers as well. A dramatically larger guest worker plan should be part of the reform.

And there must be a pathway to citizenship. Political parties should change to make themselves more attractive to immigrants, not impede increased immigration to serve their short-term electoral needs.

Our current illegal immigration problem is transient, temporary, and is more a function of the poor economy than it is representative of our true immigration needs. There is a vocal minority trying to block any form of immigration reform for a variety of reasons, but you put political expediency ahead of strategic imperative at your own risk.

Let’s also be honest with ourselves about a couple of things: we have a 2,000 mile border with Mexico. It is impossible to seal it at any cost, nor should we want to. Secondly, we are not sending the millions of immigrants that are here now illegally home. For one, it’s not possible with existing law enforcement resources, and secondly, our economy is too dependent on immigrant labor.

DC is a sanctuary city, which means it does not cooperate with federal law enforcement on immigration matters. We’re guessing that the people who created the policies that made DC a sanctuary city were operating out of compassion, not strategic foresight, Whatever the reason, it puts DC in a much better position to compete for immigrant workers than most other cities. Establishing a strategy that welcomes them now and integrates them into the local economy will serve the area well down the road.

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The Business Journal recently released a study measuring total brainpower in 102 metro markets. It’s not 100% clear from the study, or this chart, whether they’re referring to DC proper or to the national capital region, but either way the results are impressive. Washington wins the brainpower battle by a fairly significant margin. This bodes well for the District in terms of entrepreneurship and future business growth. Right now, our economy remains too dependent on federal government spending and there is a serious need to diversify our economy. People with bachelor’s degrees and above are far more likely to start new business enterprises than the rest of the population. This will help as the District reorients itself away from a government-centric economy.

 

Market Brainpower score Brainpower rankAscending Adults with high school diplomas Adults with bachelor’s degrees Adults with graduate degrees
Washington 6.9382 1 90.0% 47.6% 22.8%
Madison, Wis. 5.5477 2 94.5% 42.9% 17.6%
Bridgeport-Stamford, Conn. 5.3254 3 89.3% 44.9% 19.4%
Boston 5.1787 4 90.6% 43.0% 19.0%
San Jose 5.0589 5 86.4% 45.7% 20.1%
Durham, N.C. 4.9767 6 87.5% 43.1% 20.4%
San Francisco-Oakland 4.1938 7 87.5% 44.2% 17.3%
Raleigh 3.1465 8 89.8% 41.3% 13.8%
Minneapolis-St. Paul 3.1034 9 93.0% 38.7% 12.8%
Colorado Springs 2.8696 10 93.9% 34.8% 13.4%
Albany, N.Y. 2.8080 11 91.7% 33.8% 15.2%
Seattle 2.7665 12 91.4% 37.3% 13.5%
Denver 2.6797 13 89.5% 38.9% 13.7%
Portland, Maine 2.6413 14 92.8% 35.8% 12.9%
Hartford 2.6374 15 89.4% 35.4% 15.4%
Austin 2.5165 16 87.9% 40.2% 13.6%
Baltimore 2.4861 17 88.6% 35.7% 15.3%
Provo, Utah 2.0433 18 93.4% 35.7% 10.6%
New Haven, Conn. 1.8431 19 88.2% 32.5% 15.1%
Portland, Ore. 1.7728 20 90.5% 34.1% 12.5%
Rochester, N.Y. 1.7551 21 89.4% 32.3% 14.1%
New York City 1.6928 22 84.8% 36.5% 14.9%
Worcester, Mass. 1.5618 23 89.2% 33.7% 12.9%
Philadelphia 1.4721 24 88.7% 33.4% 13.1%
Kansas City 1.3862 25 90.5% 33.0% 11.8%
Des Moines, Iowa 1.3646 26 92.3% 34.2% 9.9%
Columbus 1.3185 27 90.1% 33.3% 11.7%
Chicago 1.1885 28 86.6% 34.4% 13.1%
Omaha 1.1883 29 91.1% 32.9% 10.8%
Atlanta 1.1157 30 87.5% 34.7% 12.1%
Poughkeepsie, N.Y. 1.0201 31 88.4% 30.7% 13.2%
Pittsburgh 1.0064 32 91.8% 29.8% 11.3%
Buffalo 0.9565 33 89.8% 29.2% 12.8%
San Diego 0.8393 34 85.3% 34.1% 13.0%
St. Louis 0.7993 35 89.7% 30.5% 11.7%
Milwaukee 0.7962 36 89.6% 32.0% 11.0%
Honolulu 0.7880 37 90.3% 31.6% 10.7%
Syracuse, N.Y. 0.7637 38 89.1% 29.1% 12.7%
Albuquerque 0.5940 39 87.4% 29.7% 13.0%
Salt Lake City 0.4020 40 88.9% 31.0% 10.7%
Indianapolis 0.4012 41 88.6% 31.2% 10.8%
Ogden, Utah 0.3979 42 92.5% 29.3% 9.1%
Richmond 0.3843 43 86.6% 32.0% 11.7%
Bradenton-Sarasota, Fla. 0.3647 44 89.7% 28.3% 11.4%
Springfield, Mass. 0.3455 45 86.8% 29.7% 12.6%
Tucson 0.2907 46 87.2% 29.8% 12.1%
Harrisburg, Pa. 0.2727 47 89.7% 28.5% 11.0%
Charleston, S.C. 0.2490 48 87.8% 31.1% 10.9%
Charlotte 0.2193 49 87.2% 33.1% 10.2%
Virginia Beach-Norfolk 0.1960 50 89.7% 28.6% 10.7%
Cincinnati 0.1786 51 88.8% 29.5% 10.8%
Akron, Ohio 0.1474 52 90.5% 28.4% 10.1%
Columbia, S.C. 0.0982 53 87.9% 29.6% 11.1%
Nashville 0.0001 54 87.2% 30.9% 10.6%
Knoxville, Tenn. -0.0259 55 87.9% 29.0% 11.0%
Boise, Idaho -0.0481 56 90.0% 29.2% 9.4%
Cleveland -0.0966 57 88.6% 28.0% 10.8%
Sacramento -0.0968 58 87.7% 30.0% 10.4%
Jackson, Miss. -0.2006 59 86.4% 29.3% 11.3%
Detroit -0.2323 60 88.1% 27.8% 10.8%
Palm Bay-Melbourne, Fla. -0.4691 61 90.0% 25.9% 9.7%
Grand Rapids, Mich. -0.4898 62 89.3% 27.5% 9.3%
Little Rock, Ark. -0.5125 63 88.6% 27.7% 9.6%
Oklahoma City -0.6133 64 87.6% 28.2% 9.7%
Dayton, Ohio -0.6290 65 88.8% 25.1% 10.4%
Wichita, Kans. -0.6498 66 88.9% 27.8% 8.9%
Oxnard-Thousand Oaks, Calif. -0.6742 67 82.5% 31.3% 11.4%
Allentown-Bethlehem, Pa. -0.7336 68 87.7% 26.5% 10.1%
Dallas-Fort Worth -0.7771 69 83.7% 31.4% 10.2%
Providence -0.7906 70 83.8% 29.2% 11.2%
Orlando -0.8096 71 87.4% 27.8% 9.4%
Phoenix -0.8133 72 86.2% 28.4% 9.9%
Jacksonville -0.8925 73 88.7% 27.3% 8.5%
Louisville -0.9106 74 87.3% 25.9% 10.1%
Miami-Fort Lauderdale -1.0793 75 83.6% 28.8% 10.6%
Toledo, Ohio -1.0806 76 89.3% 23.9% 9.2%
Birmingham -1.1729 77 85.3% 27.1% 10.0%
Tampa-St. Petersburg -1.2841 78 87.5% 26.0% 8.7%
Tulsa -1.4052 79 88.1% 25.8% 8.0%
Greenville, S.C. -1.4133 80 84.0% 27.5% 9.9%
Baton Rouge, La. -1.4523 81 86.1% 26.8% 8.7%
Memphis -1.6038 82 85.9% 25.7% 8.9%
Cape Coral-Fort Myers, Fla. -1.6337 83 86.8% 24.1% 9.0%
New Orleans -1.6493 84 84.5% 26.3% 9.4%
Scranton-Wilkes-Barre, Pa. -1.7220 85 88.6% 22.3% 8.4%
Los Angeles -1.7580 86 78.2% 31.3% 10.8%
Houston -1.7765 87 81.0% 29.0% 10.0%
Greensboro, N.C. -1.9096 88 84.8% 26.4% 8.3%
Augusta, Ga. -2.0248 89 85.3% 23.8% 8.9%
San Antonio -2.0614 90 82.9% 26.0% 9.3%
Lancaster, Pa. -2.6203 91 84.0% 23.5% 8.0%
Chattanooga, Tenn. -2.6407 92 84.2% 23.1% 8.0%
Youngstown, Ohio -2.8251 93 88.5% 19.3% 6.4%
Las Vegas -3.1208 94 83.9% 22.0% 7.2%
Lakeland, Fla. -4.6160 95 82.3% 18.1% 5.4%
Riverside-San Bernardino, Calif. -4.7258 96 78.6% 19.4% 6.9%
El Paso, Texas -5.5208 97 74.2% 20.6% 6.7%
Stockton, Calif. -5.5799 98 77.1% 18.3% 5.7%
Modesto, Calif. -6.1343 99 76.6% 16.2% 5.3%
Fresno, Calif. -6.1951 100 72.9% 19.2% 6.1%
Bakersfield, Calif. -7.3234 101 72.1% 15.0% 5.1%
McAllen-Edinburg, Texas -9.2939 102 62.3% 16.1% 4.8%

Source: Washington Business Journal

Link to WBJ story: http://www.bizjournals.com/washington/news/news-wire/2014/02/27/tbj-brainpower-rankings-2014.html?ana=e_wash_rdup&s=newsletter&ed=2014-02-27

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By Dave Oberting

In his five year economic development strategy document, DC Mayor Vince Gray set the goal of making the District of Columbia the largest technology center on the eastern seaboard. That puts us in competition with places like Research Triangle Park in North Carolina, New York, and Boston. For guidance on how the District government can foster the development and growth of its own technology industry, we can look to the tech powerhouse closer to home, northern Virginia.

Through organizations like the Northern Virginia Technology Council (NVTC), the Center for Innovative Technology (CIT) and documents like the Commonwealth Research and Technology Strategic Roadmap, NoVA has formalized its technology strategy and growth plans, which helps guide the actions of northern Virginia policymakers. With the help of these organizations and strategies, northern Virginia focuses not just on supporting and seeding startups, but on commercializing their technology.

NVTC is the membership and trade association for the technology community in NoVA. It has about 1,000 members from all sectors of the technology industry. It provides public policy advocacy on a broad range of technology issues at the local, regional, and federal levels. While the District’s tech community is smaller and younger, it’s never too early to organize a nascent industry to make progress on public policy priorities. My organization, Economic Growth DC works on legislation and regulation that impacts technology industry growth on a daily basis. It is always helpful to those efforts to have another organized ally. The voice of one small company doesn’t carry much weight, but 500 of them speaking with one voice carries quite a bit.

CIT is a non-profit economic development organization and it administers the Commonwealth Research Commercialization Fund (CRCF), which is a publicly funded vehicle for advancing research, development and, most importantly, the commercialization of Virginia technology to drive economic growth. The Virginia legislature appropriated $4.8 million for this fund in fiscal years 2013 and 2014. Commercialization is critical because that is the point at which a 20 person startup becomes a 200 or 2,000 person company. Your app can be whiz-bang, but if you don’t have a strategy for bringing it to market, your company will never be much more than an idea.

CIT also administers the CIT Gap Funds, which provide taxpayer funding to promising startups in the form of seed and early stage investments in Virginia based technology. It is important to note that the Virginia state government does not make these investments directly. It makes use of the non-profit CIT to make investment decisions. CIT is staffed with experienced investment professionals and they help to avoid the politicization that can occur with direct government investment.

In addition to these targeted incentives, Virgiania makes good use of tax and regulatory policy. It has also created a very favorable legal climate. Once a business hits about 200 employees, people become both its biggest asset and its biggest liability. Favorable employment law plays a key role in what makes Virginia the #1 state in the country for business as ranked by Forbes magazine. The District was not ranked in their survey, but Maryland was 18th. CNBC has a similar survey that puts Virginia at 5th and Maryland at 40th. It’s safe to say that DC is somewhere between Virginia and Maryland.

So what is there to learn from our nearest competitor? First, they have a coherent technology strategy that guides the efforts of policymakers at the state and local level. Secondly, they’ve built strong institutions that are designed explicitly to foster technology industry growth and make wise use of taxpayer funds. Importantly, they’ve kept those institutions outside of the government bureaucracy. And finally, they’ve created a legal and regulatory scheme that fosters faster growth.

To achieve Mayor Gray’s technology industry goals, the District can learn a lot from our nearest competitor. There are a number of things that can be done without taxpayer money, such as a revision of labor laws, but the District should not shy away from  using a limited amount of taxpayer money to build the institutions that lead to long-term growth.

Dave Oberting is the Executive Director of Economic Growth DC, a political and economic advocacy organization focused on the District of Columbia and its economy. Follow him on Twitter @GrowthDC, or email him at dave.oberting@economicgrowthdc.org.