Franklin & Marshall College Franklin & Marshall College

Questions & Answers

Session: Views from the Street: Wall Street, Main Street, and Prince Street

 

From the audience (Gene Aleci)

Lancaster did so well with respect to Reading and York. How did we do with respect to the entire state?

Sean Flaherty

This was only done for Metropolitan areas, it wouldn’t have been done for the state as a whole.

From the audience

Well, I mean, you compared Lancaster with Reading and York, but what about areas like Philadelphia and Pittsburgh, or comparable places like Erie, or Altoona, like Scranton or Wilkes-Barre. Every study seems to indicate that Lancaster is one of the few cities that’s not at the tipping point. But what you are telling us is that we have some problems. What you are saying is that if we compare ourselves to Reading and York, we see an amazing difference between us and them. But if we ourselves to Erie, or Altoona, or compare ourselves with Chester, where do we come out?

Sean Flaherty

Well, I don’t know the numbers answer that now, I can tell you later.

From the audience (Gene Aleci)

I’m just wondering, if we look at the entire state rankings, is it possible that we’re number one?

Sean Flaherty

I don’t have all the data to answer that right now.

 

From the audience (Martha Harris)

I wanted to get back to the presentations of David Nikoloff and Scott Sheely. Both of their presentations, which were excellent, very informative, concluded with the importance of technology and innovation and entrepreneurship as perhaps a key driver of economic development. I’d just like to learn more about what the Workforce Investment Board and the Economic Development Company are planning to do to support technology-based economic development strategies.

David Nikoloff

Both of our organizations support a program called Lancaster Prospers. It was an effort that began in January of last year when a planning group of 38 leaders from across the community--government, education, business--were asked to give of their time to look into coming up with a vision of what Lancaster County should be ten fifteen years out, or what Lancaster County should do to promote itself in this new and changing knowledge-based economy. So we have today Erik Pages, one of the people who worked with us, in a presentation this afternoon, not about Lancaster Prospers itself, but about the seven initiatives it has currently underway. The Chamber of Commerce, the Lancaster County Planning Commission, the Economic Development Company, the Workforce Investment Board, have split up the duties of chairing those seven active groups. Each of those groups received a charge under a document that was released in January of 2004 for a work program that they were asked to produce. Each of those groups is a different level, different areas of achievement on that work program. I can tell you that we have active groups, active leaders in each of those are pursuing that…now I would encourage you to go to the EDC website, or go to LancasterProspers.com, to see the full 30-pages-plus planning document that was released in January. There are also abbreviated versions of that.

Now to talk about what we are doing to assist in entrepreneurship and technology: couple things. For one, we have a committee that is going to be working on entrepreneurship itself, trying to see what we can do to promote and encourage risk-taking and entrepreneurship among our businesses, our people who would be prospective business people, future generations, and the current generations, people that can operate and create this assistance. Secondly, we are proposing the creation of research and development capacity in Lancaster County. Not creating another MIT or Stanford, but to encourage the colleges, universities, technical schools, and other post-secondary institutions in the County--I think we have identified about 13 of them--to gather around one or two initiatives that will benefit the local economy and bring some dynamism, that will attract the best minds in research, attract the best students, attract the best workers, and retain them in the community. John Fry, the president of this college, is leading that charge, but Francine McNairy, Ted Long, other good leaders from across the community are involved in that project. I will tell you that they are planning to meet in a week or so and they have already focused on two areas for that research and development center.

If you look at the other areas there’s one area they’ll be looking at urban settings, looking at ways to foster, promote, improve the way we live, work, and play and encourage you to look at the other areas. I’ll turn it over to Scott Sheely because one of the sectors is Centers of Excellence, looking at combinations of businesses, or business clusters with research development with academic and the government community and trying to promote and encourage improvements and best-practices adoption in this knowledge-based economy.

Scott Sheely

As I said earlier, we are actually trying to zero in on what are the competitive advantages within the clusters, and what we’ve tried to do is that in each of these centers of excellence which are related to all that, we are trying to build in an R&D component of technology transfer component, a entrepreneurial development piece, an incumbent worker training element, and then also some effort to work on the pipeline of people coming out of…(inaudible word) … and into jobs in that area. So we’ve done various things. One part of the problem has to do with innovation. oneof the things that you see in the innovation literature is that 80% of innovation happens with users, and so while we like to think that a lot of innovation happens in labs of colleges and universities, it’s usually the person who’s out there on the line who has this great idea that actually is kind of the source of a lot of innovation. So we’ve tried to keep what we’ve done with the centers of excellence more oriented toward that kind of person. How does the person with the great idea, but who doesn’t know how to develop that, do the sketches, get it patented, take it to market, that kind of thing. How can they actually begin to do some of those kinds of things?

The other part of the problem is that we’ve seen a real kind of wholesale change of policy in the way that people provide funding in our world are looking at things, and we’ve seen a real shift away from working with people who are just entering the workforce, more toward what we call incumbent worker training, training for people that are already employed. So you might have seen in the paper in the last week, we were lucky enough to get a big check from the federal government for $1.3 million. Every bit of that money is going to be spent on incumbent worker training in four different industries basically trying to raise the skill level of people who are already in the workforce--and much of that is in response to changing technology. So I think there are a couple things are afoot, and that speaks well to this idea of innovation, and we have to make some wholesale changes in the way we look at them in the economy.

David Nikoloff

I think that the most important thing in the Lancaster Prospers concept is to have all the organizations that are effectively involved in the economy, to try to engage them, to have them pushing in the same direction for a common vision. I think what we’re starting to see is that’s happening. And so, we’ll be looking at putting our investments, our dollars, into those directions and focusing in that way. I want to point out that both major parties, all their candidates for county commissioner were on the planning group—it was refreshing to see all those candidates in agreement over this Lancaster Prospers initiative. I think the Mayor is here today. The mayor was on that group and he was very supportive of the Initiative too, so we have County, City, and suburban support for this process.

From the audience

Sounds like a very worthwhile initiative. I would encourage you to also look at constraints to get this in formation and what can the city and county do to be more supportive of risk-takers that are willing to innovate, access to capital, access to appropriate land and buildings. It would be important, in addition to the centers of excellence, to know what are we not doing well, and to overcome barriers there.

From the audience (Erik Olsen)

I have a question for David Nikoloff. There were a couple things in your presentation that struck me. One, I’d like you to expand on what you said. You said you were interested in focusing on businesses that create wealth as opposed to businesses that create jobs. And the other thing that stuck out was that, in my own research I’m concerned about the loss of highly skilled well-paying jobs for a large number of people in the community. Now, the anecdotal information you gave about self-employment, well I don’t see that that’s a viable solution to the widespread loss of jobs. Overwhelmingly, self-employment is more than like the gazebo example you gave, rather than the $2 million a year examples you gave. So, I just want you to expand a little bit more on how you see the difference between job creation and wealth creation.

David Nikoloff

Yes, it seems to be counterintuitive. But I think that the old formulas we looked at--numbers of people and at what those people produced, and their income and wealth—that’s exactly the wrong thing to do. And also it’s a wrong thing to do to invest in businesses that depend on protectionism and barriers to trade: those are not really long term viable businesses. I’ll give you an example. In the early 90--we forget now, when the debates are all about China and outsourcing, but, in the early 90s the debate was centered on Japan Inc. taking over the world economy; Japan Inc set up barriers to trade, barriers to entry to the marketplace, and they bet on a one-way ticket which was manufacturing. That formula resulted in no growth and recession that has lasted a decade in Japan. Meanwhile, the United States which was criticized at the time for dropping barriers to trade, getting involved in the international economy more aggressively in NAFTA and later the WTO. The US administration, the first Bush’s administration, basically adopted that international policy, and so did Clinton later, and we saw the US have one of its most productive decades in history. Meanwhile, manufacturing, in terms of raw numbers of jobs, declined during that decade, and we did see self-employment increase. And I might point out that those people are making those gazebos, designing those gazebos sometimes are those that are making $2 million a year, we have Amish millionaires in Lancaster County.

The idea that we’re losing all our high-quality jobs I dispel that notion. I think that we are creating a number of jobs, but a number of those traditional high-quality jobs just aren’t going to be around anymore. It’s not just because of trade, it’s also because of technology. The question about entrepreneurship and what that will do I think that the small business model that everyone was proposing was going to happen is happening now, … because back in the 60s, I remember when we were taught small is beautiful and all those other things we had in our books on economic literature back then, they were pointing out. Well, we have this sort of perfect storm occurring in our economy where technology, trade is coming together. And people, the average person acknowledges this. There are people who want to see the various trade and technology coming in reigned-in in order to protect themselves, to protect their interests. But I think we’re going to see, getting back to the point, a winding back, a winding back slowly, that we have to keep ourselves flexible, we have to allow for the genius of the American people, which is entrepreneurship, for risk-taking to flourish. And we’re going to see new businesses created in ways that we didn’t expect, just as we didn’t expect that Japan would collapse, that it would stagnate, and that the American economy would take off in the 1990s. I think we have to allow for this transition to a new knowledge-based economy to occur. We have to foster proposals and processes and policies that allow for entrepreneurship to develop, to allow for self-employment to develop. I think the people on the street can understand that the "I’m going to work at an industrial plant, that will be my career," is gone. I think the average person understands that, and they want to be more flexible.

From the audience

I have a two-part question. Sean, I noticed that, as you broke out your statistics, you included gender as a factor. The question I have, with the stats that you put up here in the large chart, was gender considered in that breakdown? and I was not surprised, but still appalled at the number of women in poverty the difference between the percentage of women in poverty and the men in poverty is quite distinctive. And then I would follow up with a question for the two gentlemen: what are we doing in economic policies at the local level to address that disparity in gender?

 

 

Sean Flaherty

Just briefly before you respond to that: It wasn’t the poverty data, in what I presented, that related to differences between men and women, but data on self-sufficiency standards. You can think of that as a somewhat more expansive definition of poverty. You guys want to take the second part of that question?

Scott Sheely

I think we’re aware of that and we trying to do things. We keep running into a lot of cultural barriers, to try to recruit women for the construction industry where there are some very good high-tech jobs, and we have tried everything we can think of to get that going--and some of it’s mindset, some of it’s hostility in terms of the work environment. There are a lot of other issues. Which is not to say that we’ve given up trying, but that’s one area that we’ve looked at. The same thing would be true of manufacturing. There are some incredibly high-skilled, well-paying jobs that are available—and, actually, I guess what we’re finding is that it’s not only women but people in general don’t want to think about manufacturing b/c they believe that all those jobs are gone away. Steve Fries will tell you that, at Alcoa, a job like an industrial maintenance person, who was in the past the person who could turn the wrench and do the wiring, has now become somebody who is dealing with electronics and networking and the level of skill that is involved in those jobs is very high, but we can’t get women or anyone else interested in those jobs. It’s very much of a struggle when everyone wants to go to a four-year college and come out and be a lawyer or a doctor. So, there are a lot of issues involved.

And we have issues that are ethnic issues, and one of the things that we’ve found in the Latino community is that we have made a very conscious effort to get Latinas involved in career ladders that lead to higher paying jobs in healthcare, RNs and up, but one of the problems is that when they start moving into those jobs, it becomes a significant problem with their significant other because of status issues, and that’s a big deal in that subculture. So how do you deal with those and how do you work around those issues? We’re going to keep trying, but that’s kind of where we’re at.

David Nikoloff

One issue that runs through all of this as it plays itself out is education. We didn’t talk about education attainment levels. Even if you factor out the plain orders in Lancaster County, our educational levels are far below state and national averages. Maybe … I challenge the center to look at how that plays itself out in terms of gender and also of race. And what is the importance of education among our populace. If you’re not prepared, if you don’t have the basic credentials, basic knowledge of what is good and necessary in this changing marketplace, and you think that the old blue collar jobs where you have a strong back and a weak mind and still live, still make a living in Lancaster County, that’s gone. Dispel yourselves of that notion.

From the audience (Stanley Michalak)

There’s no question that you have entrepreneurship growth in business, the McMansions are being built all over the county. But it’s a fundamental fact that intelligence is a normal distribution. And it’s also clear that those people in those upper quartiles of the intelligence are doing fine and making out like bandits. The belief that, somehow … when I went to kindergarten there were 1800 of us, and we didn’t have mobility, this was in Reading, PA. 646 of us graduated, those other 1200, by and large, went into industrial jobs, they didn’t have much of an education, they were not skilled, they were well-paid. And they were well-paid for one very simple reason: power. They had the power of the unions. So now that the unions are busted, and intelligence is on a normal curve, what’s going to happen to the people on the bottom half of the curve? There’s no way they’re going to be entrepreneurs. I would like to know the question, what do we do with that? And I don’t think that schooling is the answer.

David Nikoloff

I think that for you to argue that the decline of unions is due to union busting is wrong, I think really technology has changed the way people work.

From the audience

I think that’s true. But if we’re in a service economy, if now create the United Service Workers of America…

David Nikolff

We have to begin to make a transition now in value and knowledge--and it’s the accumulation of knowledge: so that people don’t decide that ok, I’m going to graduate with my high school diploma and that’s enough, or that just because I’m strong-backed and weak-minded, if I follow orders, that’s enough. That’s not a recipe for success anymore. It may have been in the past. So now the challenge that we have as a community is to try to increase the value that we place on knowledge and the value that we place on its accumulation and use.

Now I think what’s interesting is the expansion of HACC, which I mentioned previously, is noteworthy; because what you have there are 28-year-old people who have reached into their pockets and spent their own money, and you’ve seen a campus expand three times in 7 or 8 years. They are at the point now when they’re looking for a satellite campus. That’s telling you something. That’s telling you that people understand that have to get the credentials and they have to move beyond what they did with the old models. "Just to join the union, or get a job, work for that major employer, that’s gone, and now I have to drive my own futures. Technology, sociology, politics, economics, they’re all impacting me, and I could do two things. I could be a victim or I can drive change." So we have to encourage our people to be change drivers, not victims.

From the audience

I just had a question, earlier you were saying you were trying to actively recruit women and other people to work in construction, so if you’re looking to do that, what is the difference in pay that you’re willing to pay women and men, because I know they’re not quite the same.

Sean Flaherty

That’s one of the barriers.

From the audience

So, why is that? If you want women as much as men, why aren’t you willing to pay them the same?

Scott Sheely

Well, first of all, it’s not ME! (Audience laughter).

I think that’s one of the problems, I mean if you look at the hospitality industry, many people start their career ladder development in the hospitality industry and the pay stinks. And people from the hospitality industry come to us and say why can’t I hire any workers? And they tell us that they’re paying minimum wage. And then you kind of scratch your head and say: well, maybe that’s the reason. I think that part of this is there’s kind of a moral responsibility of the employment community to get with it in terms of—I mean, if you want a workforce, you’re going to have to pay for it, and if you want a skilled workforce, you’re going to have to pay even more. You’re going to have to do things like having internships and mentorships and reaching back into the educational system and helping people with those kinds of issues. In this County, underemployment is a bigger problem than unemployment. We have so many people working in low-skill and low-wage jobs, and that’s where our economy has grown over the last 10-15 years. What are we going to do to make sure the person who is a maid in a hotel doesn’t stay a maid in a hotel forever and ever? That’s the quandary, I think, for those of us in planning positions who are trying to define interventions that will change that. How do you do that? So we began where we can to use the bully pulpit to get people in policy to get behind us say: yeah you have to do that, and the market will be what it will be and that’s a very difficult thing to do, there’s a lot of inertia in there.

Sean Flaherty

I think what I’d like to do now, is to break. If there are still people with questions to ask, you may stick around and ask the speakers separately, but everyone who wants to go to lunch, you are free to go.