Equitable Innovation Economies Initiative

In the 2010s, cities across the U.S. were increasingly focusing their economic development efforts on innovation to spur economic growth. Investments in these assets—from advanced manufacturing technologies to tech firms to makerspaces—were championed as able to grow businesses and create new jobs, but acknowledged to also exacerbate inequities in cities already facing widening economic and racial disparities.

Background

In 2015 the United States was in the midst of a profound shift in our economy and demographics. Unemployment was down to its lowest level in nearly 10 years, yet inequality was rising rapidly and the percentage of working poor was growing, particularly in communities of color.¹ That era’s anemic economy was a direct result of policies and practices that denied full economic opportunity to people of color, squandering our most important economic resource—the talents and entrepreneurial energy of all our people. We will become a majority people of color nation by 2044; already, 46 percent of all youth are of color.² Yet those who entered the workforce at that time had fewer opportunities for economic mobility and success than their parents, even as these young people make up the most diverse generation in our nation’s history.

Investing in low-income communities and communities of color is essential for the future economic prosperity of our nation. If racial disparities in income and employment were eliminated, the U.S. economy would be $2.1 trillion larger than it was.³ Economists have found that cities and regions with lower inequality experience more growth and less frequent and severe economic downturns.⁴ In other words, equity—just and fair inclusion in society so that all can participate, prosper, and reach their full potential—is not only a moral concern; it is an economic imperative.

Achieving equity will require widespread access to good jobs. Businesses from the new breed of “makers” to more established but innovative manufacturers can help to reduce inequality by creating new employment and shared prosperity.

Cities across the U.S. were increasingly focusing their development efforts on innovation to spur economic growth. Known by many names—the creative economy, the knowledge economy, innovation districts, advanced industries, and more—this innovation economy comprises entrepreneurs, engineers, designers, makers, and manufacturers who are fueling jobs and growth across myriad industries by developing new products and more efficient and profitable ways to bring them to market.⁵

Growth in the innovation economy, with its focus on technology, entrepreneurship, and productivity, can present an opportunity to bolster local economies and create quality jobs. But how cities pursue innovation matters. Equity and inclusion were not baked into the models for innovation economies; it will require an intentional focus on overcoming structural racism and institutional barriers that have excluded many low-income communities and people of color from the wealth and benefits of this emerging economic driver.

1. National Equity Atlas and Alan Krueger, Laurence Katz, “The Rise and Nature of Alternative Work Arrangements in the U.S., 1995-2015.” March 29, 2016.
2. National Equity Atlas
3. Sarah Treuhaft, Justin Scoggins, and Jennifer Tran. “The Equity Solution: Racial Inclusion Is Key to Growing a Strong Economy.” PolicyLink and USC Program for Environmental and Regional Equity. 2014.
4. Chris Benner and Manuel Pastor, “Brother, Can You Spare Some Time? Sustaining Prosperity and Social Inclusion in America’s Metropolitan Regions,” Urban Studies: 2014.
5. See, for example, John Howkins, The Creative Economy: How People Make Money From Ideas, Penguin Books, 2001. Mark Muro, Jonathan Rothwell, Scott Andes, Kenan Fikri, and Siddarth Kulkarni, “America’s Advanced Industries: What They Are, Where They Area, and Why They Matter,” Brookings, 2015. Bruce Katz and Julie Wagner, “The Rise of Innovation Districts: A New Geography of Innovation in America,” Brookings, 2014.

Goals & Objectives

EIE focused on the following goals:

• Establish equity objectives in the context of the innovation economy and connections with urban manufacturing

• Develop indicators to assess impact and track progress towards more equitable economic development

• Integrate equity objectives into program design and implementation

• Create a model for collaboration across cities and disseminate lessons learned

LISC Indianapolis

Prosper Portland (formerly Portland Development Commission (PDC))

New York City Economic Development Corporation (NYCEDC)

The City of San Jose’s Office of Economic Development (OED)

Each EIE pilot city focused on a deliberate, holistic approach that integrated equitable growth principles into land use, business development, entrepreneurship, technology transfer, and workforce strategies while preserving or creating good job opportunities for people with a range of skills and backgrounds. Here are select strategies the pilot cities focused on:

Support entrepreneurs of color in manufacturing and innovation.

Many entrepreneurs of color face unique challenges to starting and growing their own companies, including barriers to accessing affordable capital, lack of access to mainstream business assistance and networks, and other challenges. Programs that are supporting innovation entrepreneurs should take deliberate action to ensure they are effectively reaching, recruiting, and retaining people of color.¹ In New York City, the Next Top Makers program intentionally recruited workshop speakers from diverse backgrounds to help reach into more communities. In Portland, the Portland Development Commission ran an accelerator that focuses on people from communities that are underrepresented in tech and innovation and has helped to launch a startup fund to invest in companies with diverse founders.

1. For more on the challenges and effective strategies, see the Initiative for a Competitive Inner City “Creating Inclusive High-Tech Incubators and Accelerators,” 2016.

Preserve and invest in industrial land and stable, affordable housing simultaneously.

Cities with robust innovation sectors are challenged to both preserve middle-wage jobs in industrial areas and improve housing for low-income workers. Land use strategies should pursue both affordable housing and preservation of middle-wage jobs simultaneously. San Jose chose to prioritize industrial and manufacturing uses in its industrial land rather than convert it to office parks or housing while also promoting affordable housing development along transit corridors. In Indianapolis, the city and partners re-invested in urban industrial corridors to revitalize manufacturing activity, increase employment opportunities, and stabilize nearby neighborhoods. This included participation of community groups in the revitalization process to ensure ongoing advancement of equity goals.

Invest in job training into skilled manufacturing jobs for residents with barriers to employment.

Job training and placement programs can help manufacturers find workers with the right skills while creating pathways into jobs that pay family-supporting wages. In San Jose, the city helped to connect young people from disadvantaged communities to employment opportunities with local manufacturers looking for talent.

Prioritize the creation of jobs that pay a living wage.

Jobs that pay good wages and provide career opportunities in the innovation economy and manufacturing help to drive economic growth that benefits all workers. In Indianapolis, LISC worked with a local developer to track workforce demographics, wages, and opportunities for advancement in the companies that locate in a new industrial site. Their goal was to ensure that businesses are providing good jobs and opportunities for local residents.

Strengthen the manufacturing base through technology transfer partnerships.

Access to advanced manufacturing technologies and product development opportunities can help existing manufacturers compete. Strategies that facilitate technology transfer partnerships between R&D firms, universities, business extension partners, and other service providers enable manufacturers to adopt the latest technologies and provide skills training for their workforce. New York City launched FutureWorks, a new program that supports early stage companies using or developing new technologies and products and helps existing manufacturers integrate advanced manufacturing processes.

Deepen partnerships and expand networks into low-income communities of color.

Building long-term and authentic relationships with local community members can help to ensure that the priorities and strategies a city implements will be responsive to the needs of the communities they are intended to benefit. In Portland, the Portland Development Commission adopted a new strategic plan that acknowledges the agency’s history of contributing to the displacement of Portland’s Black community and commits to becoming an anti-racist, multicultural organization and building long-term relationships in communities of color.

We authored City Snapshots for each of our four participating cities. Each Snapshot gives a brief overview of why they participated in EIE and what they learned.

The framework for the EIE pilot spanned three broad phases: defining the problem and potential impacts; discussing and refining strategies with a range of partners such as community groups, universities, and businesses; and establishing equity indicators. Each of these phases informed the other: for instance, analysis of baseline data led to refinement of program strategies, and conversations with stakeholders revealed insights about perceived barriers or brought new resources into play. The EIE process was just one approach to advancing local equity strategies and anyone who uses our approach should be open to adjustments that their work needs. Our hope is that by sharing this methodology, we will elicit ideas from others pursuing similar work and add to resources for the field.

I. Visioning Success: Defining Equity Objectives and Potential Impact

In the first part of this process, the pilot cities reflected on the baseline context in their cities and visualized what success might look like for each project. The objective of this work was to identify and engage the target beneficiaries of each strategy, define the barriers they confront, and solidify equity objectives.

Process

• Discuss critical equity objectives both at a city level and for the program strategy of focus. In several of the pilot cities, two categories of objectives emerged: goals related to the population level, such as wealth creation in a specific neighborhood or job placements at the citywide scale, as well as program level objectives such as businesses launched in an incubator. In some instances, cities used this step to translate policy directives into more specific, tangible program goals.

• Identify which groups will be most impacted by pursuing these objectives. What is the target population and what barriers to access do they face? We looked at five different groups and places that may be impacted by this work: businesses, workers, residents, neighborhoods, and the city overall. Within each of these, we disaggregated their populations to think about the consequences for different subgroups (for example, minority-owned, women-owned, small, or local businesses).

• Prioritize equity objectives. We tried to more precisely define the problem being solved and narrow down objectives as much as possible by gathering new information. For example, some cities analyzed barriers and potential opportunities for beneficiary groups by collecting initial baseline data, and then evaluated their capacity to act on this information.

II. Expanding Approaches: Engaging Stakeholders and Refining Program Strategies

The objective of this phase was to understand how current programs and partnerships support objectives and assess opportunities to refine or add to current strategies. Engaging current and new stakeholders was central to this process (a stakeholder is defined as anyone who will be, or should be, impacted by a program). Each city focused on mapping the partners they were currently working with on their equity goals. They then identified challenges in program implementation and additional stakeholders to engage in brainstorming solutions.

Process

• Integrate new perspectives in strategy design. The EIE cities brought beneficiary groups and other stakeholders into program development discussions to gain firsthand perspectives on what has and has not worked. Throughout the pilot process, cities engaged a range of partners, from other city agencies to non-profit organizations to funders.

• Find analogous examples in the field. Learning from other cities was an invaluable way to quickly identify examples of both successes and failures in program design. The EIE group and its peer cities provided a natural platform for information exchange. We also created an online resource library cataloguing best practices and relevant examples from across the country and made connections to other Mechanism cities and experts in the field.

• Create an implementation plan. How can strategies be realigned and operationalized to achieve more equitable outcomes? An important aspect of this process was assigning roles among project partners, and discussing the right private and philanthropic sources of funding for implementation.

III. Establishing Equity Indicators to Measure Impact

From the outset, the EIE process emphasized data collection as a means to illustrate impacts and outcomes of these pilot efforts, informing ways to refine or possibly scale this work. We approached this by creating a long list of indicators customized to each program strategy based on potential program level and population level outcomes. The cities then identified what was feasible: for instance, they looked at what data was readily available, the process and tools they would need to collect new data, and how meaningful this information might be over time. Most were able to commit to developing 3-5 indicators in the short term, collected through short surveys tied to program activities or investments. For example, Indianapolis collected employment and wage data in an industrial redevelopment project, and New York City assessed how outreach to communities of color impacts their involvement in the Next Top Makers program.

The EIE reports were authored by Tanu Kumar, Annie Levers, Chris Schildt, and Alexis Stephens, and designed by Ben Dodd and Nepal Asatthawasi.

These practitioners and thought leaders provided invaluable insights and questions to guide our work: Chris Benner, Karen Chapple, Shawn Escoffery, Teresa Lynch, Cecilia Estolano, Laura Wolf-Powers, Greg Schrock, and Cora Weissbord.

Thank you to Inna Branzburg and Abigail Ellman for your contributions to this effort.