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Employment Details
Six factors are critical to increased employment. They are Legacy of Place, Business Dynamics, Racial Inclusion and Income Equality, Individual Entrepreneurship, Urban Assimilation, and Urban/Metro Structure.
While legacy of place is the most important factor, it is also one of that policymakers have no control over, because it depends solely on the past. Policymakers can move the needle on the remaining factors through targeted initiatives. NEO's generally low ranking among these factors indicates considerable room for new initiatives.
Legacy of Place
The NEO region ranks 18th in Legacy of Place. Since this factor negatively impacts Employment, this is not a good result.
Legacy of Place reflects the demographic, social, and economic history of metropolitan areas. It includes variables that may suggest older physical infrastructure including industrial and residential buildings (approximated by the percentage of houses built before 1940), industrial heritage (share of manufacturing employment), and racial and poverty concentrations in central cities (dissimilarity index and the core city's share of poverty relative to the core city's share of the metropolitan population). This factor is different from other eight in that it is a policy variable, which could be changed to improve future growth prospects. Rather, it is a reminder that many regional economies must overcome historical circumstances in order to return to a path of growth. It also offers a convenient way to select a group of metro areas that share similar legacies with one of the four NEO metro areas.
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Business Dynamics
The region ranked in the bottom quartile, in 125th place, for business dynamics.
This variable measures business dynamics in a metro area and is calculated as the ratio between business openings and business closings of single-site companies. Metro areas with more business openings than closings have a healthier and more dynamic economy. Although this measure analyzes the dynamics of business establishments and not the employment associated with these openings and closings, it provides a good proxy for employment changes due to business dynamics that occur within regional economies.
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Racial Inclusion and Income Equality
The region ranked 108 for Racial Inclusion and Income Equality, placing in the bottom quartile.
Poverty and segregation come hand in hand with high rates of crime and social welfare. Variables included in the Racial Isolation and Inequality factor have a distinctly different pattern of variation across metropolitan U.S. from the variables that measure assimilation of different ethnicities and immigrants in society's social and economic life. Areas with a large black population have a different set of economic and social problems and, therefore, a different path of development.
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Individual Entrepreneurship
The region ranked 92 for Individual Entrepreneurship, which placed the region in the third quartile.
The Individual Entrepreneurship indicator includes two variables: percentage of self employed and the share of business establishments with less than 20 employees. This factor confirms researchers' projections for the increased role of small and personal businesses in the economy. The small business sector is expected to expand because the growing digital infrastructure reduces the barriers to entry by lowering the costs of starting a new business as well as opening new markets and new industries.
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Urban Assimilation
The region ranked 117 in Urban Assimilation, ranking in the bottom quartile.
Assimilating minority populations into the economic and social life of regions through advanced community development and equity greatly enhances regional growth. Four of the five variables included in this factor describe ethnic diversity by the share of Hispanic population, percentage employed in minority-owned businesses, percentage foreign born population, and the percentage of Asian population. The variation of the Urban Assimilation indicator is clearly driven by the presence of the Hispanic population variable.
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Urban Metro Structure
The region reached the top of the second quartile, with a ranking of 40, for Urban Metro Structure. However, this indicator has the least influence of the seven in determining Employment growth.
Economic development literature suggests that metropolitan areas with healthy central cities have stronger economic growth over time. Two variables in our analysis have their highest loadings in this factor, central city population as a percentage of metro population and the rate of property crime. This factor is more difficult to interpret since the larger share of population in a central city is considered as a positive characteristic of a metropolitan area, but at the same time, this variable is highly correlated with high property crime rate, which is a negative attribute of regional life.
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