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Development Expert Urgers Communities To Be Selective When Trying To Expand Job Base

Although Wisconsin”s unemployment rate is the lowest in decades, many local officials are still trying to figure out what their communities can do to attract new businesses and add jobs. Among their best choices are investments in their roads, sewage plant and schools, according to a University of Wisconsin-Madison expert.

Improvements in infrastructure and education may aid growth of both manufacturing and service jobs, according to a study of 12 local economic development policies and job growth in 900 cities during the mid-1980s.

“It”s less clear from the study that communities benefit from adopting other policies such as financial incentives for businesses, promotional activities, revitalization and preservation efforts, or land development programs,” says Gary Green, the study”s lead author and a rural sociologist in the College of Agricultural and Life Sciences.

During the past 20 years, adopting such policies has become so pervasive that competition among communities for the next printing plant or mail-order service center is often characterized as an “arms race.”

“The results don”t offer much comfort to city officials who sometimes adopt a laundry list of economic development programs to generate jobs in their community,” Green says. “Business people say that the most important factors in selecting a location are proximity to their source of materials and their markets, availability of labor, and good transportation links. But after considering major factors like that, some businesses may still play off one community against another to see who makes the most attractive offer.”

Poorer communities and those that have recently lost a major employer are sometimes desperate for new jobs, says Green, who has studied development issues for 10 years.

To analyze Wisconsin”s labor markets, Green has surveyed 2,000 employers and 25,000 workers in 25 counties during the past few years. He has several suggestions for officials hoping to expand the local job base.

Think first of helping existing business expand. Locally owned businesses have roots in the community, Green says. That”s an advantage in an era when many businesses have become very mobile. Green”s data show that compared with branch plants of out-of-state companies, Wisconsin-owned companies have been giving their workers larger raises.

Look for a new employer whose labor needs match the skills of people in the community. A new business is more likely to select a location with a labor force that meets its needs. A new employer could select your community, Green says, but might then turn around and hire most of its workers from outside the area.

Evaluate all the costs as well as the benefits of a new business. Communities need businesses that will create jobs that pay more than $6 an hour, Green says. He also cautions communities to be aware of hidden costs. In the rush to bring in more jobs, communities may overlook the costs associated with expanding local schools, building roads, and extending water and sewerage lines.