Even well before the impact of COVID, communities throughout the U.S. wrestled with changes in local industry and lost jobs. As a result, they began to vie with each other to pull in a major employer, such as Amazon or Tesla.
But the cities who ‘won’ these competitions did so because they gave these corporations massive tax breaks and other perks, which in the end, further reduced their ability to provide affordable housing, infrastructure, expanded school systems and public transportation—all things their residents needed, as well as the employees at these new Amazon or Tesla sites. Instead of improving their regional economy, in many cases they simply created new economic challenges and lowered the quality of life in their cities.
As with most social problems, however, there are people who have long been working on actual solutions—and know how to effectively grow a city’s economy. One of those is Chris Gibbons, who founded the National Center for Economic Gardening in 1987. The Center’s approach is radically different—supporting local companies rather than attracting outside corporations. We sat down with Gibbons to discuss how he sees our current economic situation and how this approach can help.
Can you explain the idea behind the National Center and its coming into being?
The whole idea of Economic Gardening came about when I was working in Littleton, Colorado. The major employer had a major layoff and at that time there was very little conversation about building an economy through entrepreneurial activity.
I went to a speech that talked about economic developers—how they go out, recruit companies and do all this big hunting. They said, what you really ought to do is stay home, water, fertilize and weed and we got to “Economic Gardening” instead of economic hunting.
We took that term and created the idea that we’re going to work with local companies.
We found out a couple of net results. One is that most jobs are created locally, whether you do anything about it or not. It runs in the 90-plus percent range in those communities.
Secondly, we started looking at the data and about 90% of the companies never got beyond 10 employees. And those (10%) that do are what we started defining as Stage 2 companies.
We knew we wanted to work with local businesses and look at these Stage 2 companies and see what they want. We realized that we needed to solve root-level problems before the tools can kick in.
Can you explain what a Stage 2 company is, and why those are critical for economic development?
We define Stage 2 companies as being between 10 and 100 employees and between $1 million and $50 million in sales.
And we focus on them because they’re producing most of the jobs. We’ve got data that show there are about 15% of the total number of companies that produce about 40% of the jobs.
What services do you offer these Stage 2 companies?
Most of it is business research and it’s about markets. It’s about finding qualified sales calls and high probability sales calls.
That’s the end result that you’ll get from the research.
Knowing that you’re a data geek, how does Economic Gardening’s job creation compare to traditional economic development?
It’s cheaper to produce the jobs the way we do it, typically around $1,500 per job. If you’re going to recruit jobs, those numbers might be $10,000-$15,000. If you’re going to recruit an automobile plant, you’re gonna pay $200,000-$250,000 per job.
So, first of all, we do it cheaper. Secondly, we set companies up to where they’re on a growth rate and they continue to produce jobs over the years. It’s not just a one-time thing. It is an organic and an ongoing way of producing jobs.
Those companies aren’t leaving. They typically have deep roots in the community. The recruited jobs—you never know whether they’re going to stay. They’ll get a better deal.
Berkeley Strategy Advisors developed a year two program, which includes a $50,000 incentive matching grant. What are your thoughts on this strategy?
I think it’s a good idea, because it helps people to be able to fund what we do. BSA and the City of Sacramento call it Economic Gardening 2.0.
We’re not in the implementation business and we count on turning them back over to the private sector to get all this stuff done. We’ll go into that website and point out what needs to be done, but we’re not going to go code their website for them.
So what Sacramento has done by adding this additional grant is allow you to start with the implementation.
So how many cities are are you in?
Twenty-five states, coast-to-coast. (For example), we’re in Rochester, Buffalo, New York, Dallas, Virginia, West Virginia, North Carolina, California and so on.
What questions should I ask that I didn’t?
We just think Economic Gardening is a healthier approach. It’s not that communities are making mistakes by giving companies (incentives) to come in, but it’s kind of like you’re paying them to come in.
We see ourselves as local people, organic people, you know, go slow. This is not a fad diet—this is a lifestyle. This is something (that will) completely change the way you do business over a long period of time.
It will build and build—we’ve got some of the programs that are 8 and 10 years old and built them up to where the (job) numbers have gotten really big. And those companies aren’t leaving. When the company (is local), they tend to participate in the community a lot more than a corporation that moves in. They serve on the boards, and they support the charities, and you know, they contribute. When the corporation moves in and you go ask them for something, they’ve got to go ask headquarters, and it just works differently. That’s part of the reason I like what we do.
We have a good track record: We’ve done about 3,500 engagements since I started this thing.
People always talk about the president doing stuff in the economy. Economic Gardening knows the economy. We’re down here on the ground level all over the country, talking to the businesses that are in all kinds of situations, one at a time, about what their issues are. We see the economy up close. We can tell you before it hits the newspaper headlines.
So what is happening with the economy, Chris?
The stuff that’s hitting the headlines now is what we saw early on. The economy ticked up. People were talking about COVID and all these people getting laid off, but we knew that people needed employees eight to 10 months before it started showing up in headlines. The major issue right now is that the economy would would really tick along if people could get more employees.
In regards to people not going back to work, the number of times we heard this story about women who said, ‘I work and get paid $12 an hour, so I can pay $11 an hour for childcare—I’m working to pay for childcare. If I weren’t working, I wouldn’t need childcare.’ A bunch of people told us that exact same story. ‘I’m working to pay for the job.’