In our increasingly unequal cities, inclusion is good for growth, and growth is good for inclusion. Two new reports show how it can be done.
Amid deepening inequality in America’s cities, there have been increasingly urgent calls for economic growth to be more inclusive. There’s also growing recognition that with President Donald Trump in office and Republicans in charge of Congress and many states, this is an area where cities and local governments will have to lead.
I recently wrote about how anchor institutions like universities, medical centers, big tech companies, and real estate developers must become partners in inclusive prosperity. Now, two new studies by the Brookings Institution’s Metro Policy Program take a deep dive into the widespread economic and social benefits of inclusive growth, and how economic development organizations, or EDOs, can pivot their focus to reflect these new goals.
It’s not just economic inequality we face, but the even more vexing problem of spatial inequality. Over the past couple of decades, urban growth has become increasingly unequal—a phenomenon I call “winner-take-all urbanism.” On the one hand, the divides between different cities have grown; on the other, inequality has grown the most severe in the most successful and knowledge-based cities and metro areas.
A more equitable economy is a stronger economy
The first study, “Opportunity for growth,” makes the essential connection between growth and inclusion. Based on empirical data at the national and metro level, the result is clear: inclusion is good for growth, and growth is good for inclusion.
But it has to be the right kind of growth. Over the past two decades, the critical connection between growth and inclusion has largely been severed. Each and every one of the 100 largest metros in the U.S. added jobs and increased their economic output between 2010 and 2015. But only 11—Denver, San Antonio, and Austin the largest among them—saw a rise in inclusive growth, measured in terms of employment, earnings, and poverty.
As the figure above shows, metro economies grow faster, stronger, and for longer spells when prosperity isn’t limited to just a few segments of the population. This is because more inclusive metros can tap into deeper veins of talent, and draw from a more educated workforce with a broader range of skills. These metros also tend to have higher rates of upward mobility, adding to productivity and economic growth. The study notes that if Atlanta—a low mobility metro, had the same economic mobility as Washington, D.C.—a high mobility metro—its metro GDP would increase by $18 billion, or about $3,000 per person.
But this is a two-way street: growth also benefits inclusivity. A more dynamic economy generates more jobs and economic opportunity for more people. Greater levels of innovation provide more economic diversity, and build resilience against economic shocks. And, of course, faster growing economies generate more economic output and greater tax revenues that can be used to support workforce development, job training, and broad redistributive economies—all of which can help places become more inclusive.
The bottom line is that it’s a mistake to think of growth and inclusion as somehow at odds with one another—or to develop unrelated policy approaches to address them—when in fact they are two sides of the same coin. Metro economies, and national ones, are stronger when growth and inclusion go together
The Role of Economic Development Organizations in Spurring Inclusive Growth
The second study, “Committing to inclusive growth,”* highlights the central role that economic development organizations, or EDOs, have in spurring inclusive growth. These are the organizations that typically lead regional economic development initiatives, like bids for Amazon’s HQ2, for instance. EDOs across the country have played a critical role in bolstering local business clusters; sparking innovation, entrepreneurship, and high-tech development efforts; attracting and retaining talent; and strengthening and diversifying regional economies. But their missions have not generally extended to concerns for equity and inclusion. Those agendas have typically fallen to another set of non-profits and community development organizations often operating at the neighborhood level.
But this report argues that EDOs have key assets and strengths that can spur more inclusive growth that would work in concert with the goals of neighborhood non-profits. The report draws from the experience of Brookings Metro Policy Program’s Inclusive Economic Development Lab, a six-month pilot project that worked with regional EDOs in three metros—Indianapolis, Nashville, and San Diego—to develop more effective strategies to frame inclusive growth as an economic imperative.
The report provides numerous detailed examples of how these and other EDOs can try to convince a diverse range of stakeholders of the merits of inclusive growth. It also describes preliminary inclusive growth strategies. Indianapolis’s EDO, for example, established an initiative to create business partnerships between large anchor institutions and small businesses that were historically not part of the EDO’s sphere of influence. In San Diego, a job training program designed by local businesses taught advanced manufacturing and construction skills to veterans. Nashville’s EDO supported an inclusionary zoning measure that will produce more affordable housing. These issues have typically been seen as outside the purview of EDOs, and their business stakeholders might not have rallied around them in the past.
But the biggest takeaway from the work of the Inclusive Economic Development Lab was broader than specific EDO policies, programs, and initiatives for equity and inclusion. The most important first step for these regionally-based, business-backed EDOs is to develop a regional narrative that could help change the way business and political leaders, and the region more broadly, think about inclusive growth. That will hopefully lead to new partnerships and new approaches to addressing these issues.
EDOs can help link equity and economic development, which for too long have been treated as separate issues and separate conversations. They can do so by emphasizing the development of human capital and skills across the board, especially by broadening the agenda to include upgrading low-wage service jobs. They can focus on connecting workers to jobs through workforce and affordable housing, and by ensuring that regional transit and transportation initiatives connect neighborhoods to hubs of economic activity.
While the response of many larger anchor institutions has been encouraging, points of skepticism—and sometimes conflicting missions—remain. Not all businesses are convinced that EDOs should make this shift. Smaller and medium-sized enterprises can find it hard to increase wages and upgrade jobs in the face of financial pressure. Some neighborhood and community organizations have legitimate concerns that regional EDOs, which have not always had equity and inclusion as central concerns, are now stepping onto their turf. To be effective, it’s critical that EDOs address these concerns and develop truly broad-based partnerships with these groups and organizations.
Cities and metro regions can no longer depend on the federal or state governments to deal with issues like inequality, affordable housing, economic disconnection, and social disadvantage. Just as it was locally-led partnerships spearheaded by EDOs that helped rebuild and revitalize urban and metro economies following the urban crisis, so too will it have to be EDOs that help lead the turn toward more inclusive growth.
The time has come to shift the narrative from winner-take-all urbanism to a more broadly shared urbanism for all. As one economic development official said to me recently: “For too long we emphasized economic growth, and that has helped accentuate many of the problems our cities and regions now face. Our profession is called economic development and that’s what we should emphasize; not just growth but the full development of our people, neighborhoods and communities.” That’s what the budding movement for inclusive growth and prosperity is about.
*Correction: A previous version of this article incorrectly referred to the second Brookings report as “Building inclusive cities,” and provided an incorrect link. The report is called “Committing to inclusive growth.”