Why pivot to job creation while dismissing other aspects of quality of life (the environment, public safety, or the character of our community)? The fact is that private businesses look at sales and make job offers accordingly. The incentives that cities like to offer are universal money losers. Dozens of rigorous studies have failed to find one example where enough tax revenue was generated to pay for the upfront expenditure! (Just look at all we gave the U.S. Olympic Committee, a nonprofit that doesn’t even add to the tax base). The same is true for underwriting stadiums — countless cities across the country have lost money doing that. And most of the jobs generated this way don’t go to local residents but attract new ones.
In contrast, local governments can impact many aspects of quality of life, something increasingly important to jobs and economic development. More businesses today have choices about where to be, and they often choose communities where their workers want to live. We’ll never match the excitement of a big city to many young professionals. But Colorado Springs does have a good climate, knock-out scenery, fabulous parks and trails, and a relaxed lifestyle that brings many back to raise families.
The mayor’s focus on job creation is also puzzling given his dismissal of 70 transportation maintenance workers from the City of Colorado Springs and another 25 from information technology. Word on the street: public works is next on the chopping block. “Privatization” of these departments does not make them private, since taxpayers continue to pay. But our money now goes to a private contractor who may or may not live here and shareholders who almost certainly don’t. Pay and benefits for workers are cut (directly affecting the local economy) yet the promised cost savings rarely appear. A study for the International City County Management Association (ICMA) shows cost or quality problems lead over half of local governments to take services back in.
The Oct. 25 Gazette also quotes local economist Tom Binnings (‘A bleaker forecast for the economy’): “Federal spending cuts, including the next round of automatic budget cuts, will continue to slow the growth of the Colorado Springs, Colorado, and U.S. economies next year.” The next round of cuts under sequestration will “more than offset accelerating private sector job growth.” National economic growth should be about the same next year, but our dependence on federal spending means that we aren’t likely to do as well.
Local economies across the U.S. rise and fall in large part with the national economy. Minimizing the short-term impact of any federal budget cuts and continued stimulus from the Federal Reserve will do most to help job creation here. Austerity has failed in Britain and Europe and won’t create jobs for Americans either. Diversifying over time away from dependence on federal spending, along with working to improve quality of life, is about all our city can do to affect where we fall relative to the national economy. Although the mayor rightfully desires more jobs for our citizens, he can’t create private sector ones — conventional wisdom to the contrary — and seems on a path of destroying many in the public sector. Ditto our own congressman, Doug Lamborn, who voted against ending the shutdown.
Daphne Greenwood is professor of economics at the University of Colorado at Colorado Springs and co-author of “Local Economic Development in the 21st Century: Quality of Life and Sustainability” (2010).