out·post, \ˈaut-ˌpōst\, noun: an outlying or frontier settlement
ob·serv·er, \əb-ˈzər-vər\, noun: a representative sent to observe but not participate in an activity
Wednesday, July 31, 2013
By John A. Ostenburg
Over the past nearly 30 years, Dr. Harriet Lerner has written several Dance of… books. They’ve focused on such topics as anger, intimacy, fear, and deception. The basic premise of the books is that human behavior often is similar to a circular dance in which partners always follow the same moves. As a result, the same thing happens over and over again.
“We all recognize intellectually that repeating our ineffective efforts achieves nothing and can even make things worse,” she wrote in The Dance of Anger, the first of her Dance of… books. “Even rats in a maze learn to vary their behavior if they keep hitting a dead end,” she continues. “Why in the world, then, do we behave less intelligently than laboratory animals?”
Dr. Lerner’s contention is that someone needs to break out of the repetitious dance pattern if any progress is to be made. Though her works are intended mostly to deal with interpersonal relationships, her theory also is applicable to many other situations.
I’ve thought a lot about Dr. Lerner’s points as I’ve studied the approaches to economic development in many of the far south suburban communities of Chicago that have occurred over the last several years. For the most part, every municipality has been chasing retail in the hopes of increasing the local tax base. Over and over again, the few retail interests that have been influenced to locate in the south suburbs seem to survive for a while, or perhaps to survive in small geographic pockets, but soon across the entire region a pervasive economic “dead zone” seems to be present once again.
Why is that? Could it be that we’ve been engaged in an economic development circular dance? Might it be time to change the pattern?
The goal of every retail merchandiser is to sell the product he/she is merchandising. In order to meet that end, the merchandiser looks to locate his/her business in the best possible spot to successfully accomplish the goal. That means the merchandiser looks to locate where the potential customers have the best means for buying the product. Likewise the merchandiser looks to locate where greatest number of potential customers might be found. Two factors, therefore, influence the merchandiser when he/she is seeking a location: (1) purchasing power of the potential customers, (2) the greatest availability of potential customers.
It is my belief that centers of employment offer the best opportunity for merchandisers to find the ideal marketplace. Centers of employment mean the availability of a larger number of persons who are employed and therefore capable of purchasing the merchandise being sold; centers of employment are the most convenient sites for those employed workers to visit when ready to make purchases.
Back in the days when the south suburbs had significant job centers -- steel mills, the Ford stamping plant, various manufacturing operations, etc. -- an abundance of retailers also was present. The loss of those retailers has been blamed on a number of factors, including changing racial demographics, but might the more significant culprit be that our job centers have disappeared? Today, even residents of our wealthier south suburban communities, such as Flossmoor and Olympia Fields, overwhelmingly are employed elsewhere in the greater Chicago region. As such, they are more attractive and convenient potential customers for merchandisers in the areas where they are employed than for merchandisers where they live.
So the answer to the question of why the south suburbs are not be able to entice retailers might be that we have no significant centers of employment. If that's the case, aren't we putting the proverbial cart before the proverbial horse when we continually seek retailers -- who traditionally pay minimal wages to their employees -- to locate in our communities? Is it time to change the dance? Is it time to make dance partners of meaningful job-creators rather than retailers? If the above premise regarding how retailers decide on location is accurate, creating job-centers in the south suburbs has much greater potential for attracting retailers than do our current efforts that are based on financial incentives, market studies, cajoling, schmoozing, etc.
The next question, though, is “How do communities create job centers?”
Dr. Paul Romer is a renowned economist best known for his 2004 quote that “A crisis is a terrible thing to waste.” He’s also the son of Roy Romer, the former three-term Democratic governor of Colorado, a Ph.D. in economics from the University of Chicago, a nominee for the Nobel Prize in economics, and a respected professor who has taught at some of the best institutions in the country. I think, however, that Paul Romer’s finest contribution to local economic theory is his “kitchen” analogy.
“Economic growth occurs whenever people take resources and rearrange them in ways that make them more valuable,” he wrote in the “Economic Growth” section of the online The Concise Encyclopedia of Economics. “A useful metaphor for production in an economy comes from the kitchen,” he continues. “To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.”
There’s a whole lot in Dr. Roemer’s economic philosophy, but I like to edit it down to a handful of specific points as they relate to successful kitchen practices.
- Someone needs to grow the raw materials.
- Someone needs to produce effective cooking equipment.
- Someone needs to do the actual cooking.
- Someone needs to consume the meal that’s cooked.
- Someone needs to clean up the dirty dishes after the meal is over.
- But -- most importantly -- someone needs continually to develop new recipes.
Let’s consider those steps as they might relate to the potential for economic growth in the south suburbs, specifically has it relates to the creation of new job centers.
Raw Ingredients
The very best raw ingredient we have had in the south suburbs for a number of years is a highly trained workforce. Unfortunately, though, the largest portion of that workforce has been exported to other regions of Chicagoland because that’s where the jobs are; much of the remaining workforce is aging and will not be marketable much longer.
A second significant raw ingredient is our large concentration of affordable housing. Unfortunately in that regard, the recent economic crisis has resulted in numerous foreclosures, abandonments, and other deteriorating factors than have diminished the value of our housing stock. Many single-family and multi-family structures have been torn down because they no longer were suitable as residential dwelling-places.
The third significant raw ingredient is the availability of lots of land for development. Unfortunately, expanded land-use has been handicapped by less than effective systems of transportation. If it’s difficult to transport product to and from a specific site, no matter what other benefits might be associated with that site, then it’s not really a significant raw ingredient.
But major steps presently are being undertaken to resolve many of the problems associated with the various downsides connected to our existing raw ingredients. Community colleges in the south suburbs, and even some of our high schools, have recognized the need to train a new workforce to undertake the demands of 21st Century manufacturing; the Chicago Southland Economic Development Corporation (CSEDC) has helped find funding for this effort. The work of the Chicago Southland Housing & Community Development Collaborative (CSHCDC) and the South Suburban Land Bank & Development Authority (SSLBDA) is easing the process to make residential property affordable and to get it back to livable conditions. The development of the Illiana Expressway, the interchange connecting the Tri-State Tollway to Interstate 57, the creation of intermodal facilities and expansion of both cargo and passenger rail service, the development of the South Suburban Airport, all are positive steps toward making transportation an asset rather than a detriment.
Bottom line: our raw ingredients are shaping up.
Effective Cooking Equipment
Although the south suburban region has lost a number of its manufacturing entities over the last several years, it nonetheless is ideally situated to attract much of the manufacturing that’s returning to the U.S. after the great experiment of “off-shoring.”
Companies that moved their plants to foreign soil are beginning to recognize several complications they never anticipated: (1) transportation costs have escalated, and cargo containers shipped to the U.S. full of goods to be sold often are shipped back to the off-shore manufacturing sources empty, which means all cost and no return; (2) product safety standards are not the same in off-shore countries as they are in the U.S., which has resulted in greater product liability in many cases; (3) the once inexpensive workforce to be found in Third World countries is waking up to the disparity between worker pay and corporate profit and now is demanding higher wages and better working conditions; (4) energy costs in off-shore manufacturing plants is much greater than energy costs in the U.S.
As corporations search for the best locations for new, high-tech plants, the south suburbs offer great potential because of the improvements we are making as regards our raw ingredients.
Cooks
No potential employer (the cooking equipment) is going to locate in a spot where there’s not a good potential workforce (the cooks). We’ve already shown that part of our improved raw ingredients is a better trained employee base. In addition, though, making reasonably priced quality housing available for any migrating workforce could be a very attractive incentive. Why not offer affordable quality employee housing as a tool for attracting new employee centers to the south suburbs? Putting local housing into the hands of workers is a plus for both the employers and for local governments. For the employers it can become a benefit they can extend to employees at little cost to the company; for local government it means returning vacant, tax-delinquent, and abandoned properties to the tax rolls.
The Metropolitan Planning Council has explored ways to help businesses in offering employee-assistance programs, and some businesses already are extending housing assistance as a lure for attracting a better workforce to their operations. A few municipalities even have explored this concept, but to date it has been far from the norm in terms of what is being used as incentives for business attraction to the region.
The Diners
Governor Pat Quinn has proposed creating an “inland port” within the region of south Cook County and eastern Will County. Certainly many of the current activities relating to major transportation improvements are components of implementing such a plan. In addition to the transportation improvements mentioned above (Illiana Expressway, South Suburban Airport, etc.), the creation of the Sauk Village Industrial Park and proposed intermodal facilities in Harvey and South Holland reenforce the Governor's concept.
If industry is going to sell the products manufactured by its employees (the cooks), it needs a way to delivering the goods to potential buyers (those who will eat the meal). That’s where the inland port and all the transportation improvements come into play. When completed, the improved transportation opportunities afforded to industry in the south suburbs will be second to no place else in the country.
Cleaning Up
This is where retail enters the picture. With a renewed industrial presence in the south suburbs that results in fresh job centers, the environment becomes ideal for retail marketers. People with jobs spend money. People who work close to home spend their money close to home. Retailers well-placed in such a center of employment activity are ideally situated to "clean up."
The Recipe Makers
Anyone who ever has watched “Restaurant Impossible” on The Food Channel knows that everything else being equal, it’s the menu that really makes the difference. That’s what municipal officials and other elected officeholders need to understand. In their hands are the public policy decisions that will result in either tasty or not-so-tasty recipes. Many of the improvements mentioned above are the result of a changing way of thinking on the part of municipal leaders in our region. However, more need to jump on board in meaningful support of this work.
Over the years, our south suburban communities have offered numerous tax reductions for retailers who have located in our region. Tax benefits, such as tax increment financing (TIF) districts also have provided benefits for residential developers. Maybe it’s time to put some of those tax benefits on hold and instead offer all our incentives to job centers. The more the proposed job center collaborates with local government -- such as by assuring that new workers attracted to the region for employment in the job centers are offered the opportunity to live in homes in our communities that need to be returned to the tax rolls -- the greater will be the tax benefit the job center will receive. It wouldn't be a difficult package to work out.
This may not be an approach that all government leaders would find appealing, but it is representative of the kind of fresh thinking that is needed if we are to break out of our current repetitious dance patterns. We must look at job centers as the catalyst for systemic changes that will have sustainable impact on our communities: (1) create jobs for our residents, (2) get our housing stock back on the tax rolls as assets, (3) make retailers aware that a newly employed workforce is present and is an excellent market for their products.
What a formula: it increases income taxes, property taxes, and sales taxes. A more perfect trifecta would be hard to find.
John A. Ostenburg is in his fourth four-year term as mayor of Park Forest, Illinois, and formerly served in the Illinois House of Representatives. He retired in July 2010 as the chief of staff for the Chicago Teachers Union after holding various CTU posts over a 15-year period. Recently he was appointed to serve on the newly created Cook County Land Bank Authority. A former newspaper reporter and editor, he also has been a teacher and/or administrator at elementary, secondary, community college, and university levels. E-mail him at [email protected].