Messy regional problems and collaborative leaders

Regions are highly complex social formations: millions of people, thousands of businesses, hundreds of non-profit organizations, and lots of problems.  Some problems are relatively simple to deal with.  If the local river is being polluted by sanitary system overflows during heavy storms, the solution is costly but straightforward: the region needs to invest in a sewer separation infrastructure project.  

What is more difficult for a region to handle is a situation where it is confronted by a complex of problems that are substantially inter-related and that fall outside the scope of traditional policy-making organizations.  These are sometimes referred to as "wicked" problems, and they are difficult both scientifically and practically.  They are difficult scientifically because it is hard to trace the various interlinked forms of causation that have created the problem.  And they are difficult practically because their solution requires the cooperation of groups and actors whose interests and understandings of the situation are often at odds.  And this cooperation may need to persist over a very extended period of time -- longer than the attention span of many of the politicians, business leaders, and university presidents who have taken an interest in the problem.

Take the problem of job losses in the Detroit metropolitan region.  This is a situation that is caused by a complex set of conditions and occurrences of long and short duration: business decisions about plant closings, national trends in consumer behavior, the financial crisis of 2008, family traditions of college attendance, cultural expectations about blue-collar and white-collar work, patterns of racial segregation, fiscal problems for state and local governments, and deterioration of the natural and built environment.  This problem is particularly difficult to deal with for several important reasons:

• the causes of the problem are interdependent
• high unemployment itself reinforces some of the causes of rising unemployment
  
• the policies that would reverse job losses are not easy to identify or implement
• solutions fall outside the scope of authority of the individual decision-making organizations
• solutions may require legislative action, business decisions, and mass behavioral changes that are difficult to elicit or coordinate
  

Solutions that have been proposed include --

• increase the percentage of college-educated adults
• make the metropolitan area more attractive to talented young people
• encourage entrepreneurship 
• create a more business-friendly environment
• lower the tax burden on businesses
• restructure state and municipal government to reduce public costs
  
• encourage investment in high-tech industries such as alternative energy and bioengineering
• create an "arts corridor" that links Motown and the design talents of the auto industry
  

But notice this important fact: these recommendations do not add up to a coherent and actionable strategy.  This is true for several reasons.  The relationship between the factor and the intended result is not a certain one in any of these cases; the actors who would need to take concrete actions in order to bring the factor into being are different in most of these cases; each intervention is costly, so we can't actually do all of these at once; the operational timeframes of these strategies are very different, from months to decades; and some of the strategies here would interfere directly with the efficacy of others.
 
More abstractly, interventions that might have a positive effect on employment may be difficult to achieve for a number of different reasons:

• they require coordinated action by multiple actors: for example, the legislature, the county executive, and several major corporations; and coordination is difficult to achieve
  
• the promising interventions may be conditional on achievement of several other difficult actions as well by other actors
• there may be a "blocking" actor whose interests would be harmed by the intervention in spite of its otherwise positive effects

It seems evident that a region that faces "wicked" and strongly interlinked problems like these needs to manage to create a plan for addressing the problem and a coalition of actors who have the resources and decision-making authority to take the steps specified by the plan.  The plan needs to be based on the best possible analysis of the economic and social effects of various interventions, based on sound social science and social policy analysis.  The actors might include: a group of legislators and the governor and mayor; multiple business groups; a cohesive set of labor leaders; and a few regional foundations which are prepared to commit significant resources to the plan.

Every step of this description poses new challenges for the region, because essentially we are faced with a public-goods problem at the level of a large, complicated public with a number of independent actors: there are costs associated with the formulation of a plan and the marshalling of a coalition, and the benefits of the effort will be broadly shared by the public as a whole.  So no single organization or actor has an incentive to play the lead as agent of change, and the incentives for collaboration are weak as well.

This is where "leaders" come in.  One would hope that a region has a cohort of individuals and organizations with a specific set of characteristics:

• an evidence-based vision concerning the way forward -- the changes that are needed in order to address the problem and the sorts of interventions that would bring these changes about
  
• a broad conception of the balance of public and private interests
• a willingness to engage in costly collaborations that promote the public good
• a practical ability to create and sustain collaborations among other powerful actors
• access to the resources of an organization: money, staff, prestige, and influence with other actors
  

The traditional categories of leaders are easy to understand.  Their positions might include "elected official," "corporate CEO," "non-profit CEO," "foundation president," "newspaper publisher," "labor leader," or "university president."  These individuals stand at the head of formal organizations, and their organizational positions give them ready-made channels of influence on public policy.  Their experiences in leading their organizations may also give them a degree of insight into how to approach the broad problems that a region often faces -- disaster recovery, loss of major industries, a rising trend in social or ethnic conflict.

Some of these leaders are officially charged with the responsibility of formulating strategies and policies that will assist in the solution of problems; so mayors and governors need to be actively involved in the formulation of plans for dealing with these sorts of challenges.   But most of these leaders are not charged in this way; instead, their formal responsibilities include specific organizational goals: "maximizing stockholder value," "achieving the philanthropic goals established by the board of directors," "increasing readership and advertising revenues," "protecting the interests of the members."  There will always be a wide distribution of balance points between private and public interest that are chosen by these leaders; some are more public-spirited, and some are more single-minded about the interests of the organization they lead.

In addition to these traditional categories, there are sometimes leaders in a complicated community who don't fit into the usual boxes.  They don't have executive authority in corporations, foundations, or labor unions, and they aren't elected to positions of official leadership.  What they do have is a set of assets that fall in the category of social capital:

• a big rolodex filled with relationships to powerful and influential people
  
• a strong and positive reputation in the leadership community
• an ability to be persuasive in dealing with a wide range of actors
• a passionate commitment to "making the region better"
• a philosophy of collaboration that they can make compelling to other actors
  

We might call this kind of leader a "high-level socially connected broker" (HLSCB) -- a person who is well positioned to broker relationships among other powerful "elite" actors.  The influence these leaders wield does not derive from the dollars they can commit from their own organizations (foundations, corporations), or the votes they can marshall (labor unions, student organizations), or the direct legislative influence they can wield (lobbyists, large law firms, business associations).  Instead, their influence stems from ideas, passion, and relationships, and their ability to facilitate durable collaboration among actors with somewhat divided interests.  The size of the rolodex is a measure of the density of the networks within which this actor functions; the HLSCB is unusually rich in a set of network relationships that permit him/her to make contact with an unusually large number of other influential actors.  And the HLSCB has a set of personality characteristics that lead him/her to make use of the networks and personal charisma he/she possesses to form working coalitions dedicated to solving difficult problems.  These leaders can be successful in helping a region address its wicked problems -- and perhaps more successful than the more traditional varieties of leaders are likely to be.

Why is this an interesting set of topics for UnderstandingSociety?  For several important reasons: it casts a spotlight on some of the most difficult types of problems that a region can face; it highlights some of the reasons that actors in a single sector are unlikely to be able to solve such problems; it underlines the question of motives and incentives for leaders and stakeholders that plague efforts to solve these types of problems; and it postulates one of the conditions that may be most important for securing meaningful collaboration around efforts to solve these large problems.  And it would appear that the broker-leader is one of those ingredients for successful collaboration.

Rebuilding employment

The Federal Reserve Bank of Chicago hosted a two-day conference in Detroit this week on the subject of work force adjustment (link). It was convened by the Federal Reserve Bank, the W. E. Upjohn Institute for Employment Research, and the Brookings Institution Metropolitan Policy Program. This is one of the many efforts underway to attempt to address the unemployment crisis we now face in the industrial Midwest. Participants included state and federal jobs officials, foundation leaders, and a few academic specialists.

Are there strategies that a region can pursue that will result in significant jobs creation? To grow employment in a region there are only a couple of possibilities: to expand employment in existing companies, to stimulate the creation of new businesses, and to recruit relocation of existing businesses from other regions. In each case the business owner or entrepreneur needs to be confident that he/she can add marginal revenue to the company by hiring the additional worker. This requires that the worker has knowledge and skills whose use will contribute to a saleable product. The product needs to have features of quality and utility that consumers want. Finding the workers who have the right kinds of talent, skill, and knowledge is a key challenge for the business owner. And availability of talented prospective workers is a key aspect of the company's decision to locate or grow in the region.

So what options do these pathways suggest for policy intervention to increase employment? It might be the case that there is latent labor demand out there in existing industries, where employers would hire more workers if they could find people with the right qualifications. In this case, remedial and transformative training could lead to new jobs, shifting workers from old industries to new industries. Second, there may be identified areas of potential expansion of employment where there are specific skills missing in the workforce. Maybe specialized bakeries could sell more products if they could only hire more qualified pastry chefs. Here too it is credible that we could devise specialized training programs that fill in the missing skills. There are specific community college programs that were developed for this reason, responding to the specialized needs of existing employers. But third, we can imagine a region preparing itself for a new surge of business creation and job growth in new industries and sectors. And this requires raising the number of college-educated adults in the region. This constitutes a talent pool that will encourage the expansion of businesses and overall employment.

And sure enough -- this conference focused on "talent" and "entrepreneurship." The industrial Midwest needs more of both; it is pretty well recognized that revitalization requires enhancement of the talent base of the region, and it is recognized that recovery requires the creation of vast numbers of new small businesses.

But what I find interesting and worrisome is the level of skill development that gets most of the attention in these discussions. There is a very clear focus on training rather than higher education. Much of the focus in this conferences was on targeted jobs training at a pretty low level -- training programs that provide new skills for unemployed and underemployed workers, with emphasis on laid-off auto workers in Ohio and Michigan. Several speakers emphasized that training programs need to tailor their educational programs closely to the specific needs of regional employers. The key words are skills and training --not creativity, innovation, and the bachelor's or master's degree.

But this seems wrong-headed to me; surely the most valuable asset a region can have is a significant population of well-educated, creative, and innovative people who have been challenged and stretched by a demanding university education. So shouldn't there be a lot of priority given to the complicated challenge of sustaining high-quality universities and making sure that a high percentage of high school graduates attend them?

In fact, people like Richard Florida at CreativeClass sound a very consistent drumbeat when they talk about the twenty-first century economy, emphasizing innovation and the college-educated workforce. Creativity and invention are the central components of future economic success. But the jobs-training orthodoxy points in a different direction. They emphasize vocational training and community college programs -- the message conveyed by President Obama in his July announcements at Macomb Community College relating to investments in the US community college system. (Perhaps the President's position was influenced by the findings of the 2009 Economic Report to the President, which is worth reading in detail; post.)

It seems to me that Richard Florida is surely right about the medium- and long-term story: our economy needs to constantly move towards greater innovation and greater concentration on knowledge-based sectors. So the goal of increasing the percentage of baccalaureate-level adults in a region is a crucial element of our future economic success. The ability to offer innovative ideas, to provide new kinds of problem-solving, and to work well in nimble teams -- these are crucial "skills" that emerge most frequently from a college-educated workforce. And they are crucial for vibrant business and job growth.

This means that states really need to recognize the crucial role that their universities play in their economic potential for the future. And we need to work hard in seeking out ways of allowing talented young adults to complete their college degrees -- including those 25-34 year-olds who have done some college without completing a degree. Unfortunately, public universities are suffering from fiscal crisis almost everywhere in the country. This implies that we are likely to fall even further behind in creating the highly qualified talent pools that our regional and national economies need in order to thrive in conditions of global competition. And this in turn is likely to impede the growth of employment that we all want to see.

Internal migration

People move around in most modern societies. Recent graduates of most universities often compete in national job markets, and large engineering, accounting, and consulting firms recruit at elite universities throughout the country. So there is a certain amount of location churning created by the need for talent that draws talented young people from one region to another. (In fact, it would be interesting to try to quantify this fact of geographical mobility: for example, what percentage of college graduates from New York or Florida take their first job in another state or economic region?)

But this kind of career-based mobility isn't quite what we mean when we refer to internal migration. Intuitively, we mean significant numbers of people relocating from their home region to another region for economic reasons. Internal migration leads to enduring population shifts across regions of the country.

We've seen periods of this kind of population relocation several times in our own history: the westward movement from the east coast of poor and working people in the mid-nineteenth century, the mass migration of African-Americans from the rural south to northern cities in the 1920s, and the exodus of the Tom Joad family and their generation from Oklahoma to California in the 1930s. We might even put the flow of people from Michigan to the sunbelt in the 1980s into this category, and perhaps the displacement of poor people from New Orleans by Katrina and its aftermath reaches the threshold as well.


So here is my question for the moment: is the United States on the verge of another period of significant internal migration, as workers downsized in Detroit or Akron make the painful decision to relocate in Houston or Phoenix? Are we about to see a significant shift of population from the rustbelt to the sunbelt? And what consequences would this have for Illinois, Ohio, or Michigan?

Think about the situation that faces young people in these states today. What is the best strategy for 25-year-olds in Akron or Detroit? One is to maximize their twenty-first century source of wealth and well-being -- their education and talent levels. But the second is to relocate to a place where there are the largest number of economic opportunities available to them at their existing levels of skills. And today that means a certain number of cities and much of the sunbelt. Chicago looks good, Houston looks good, and maybe Salt Lake City looks good.

If these are the primary choices available to young people in the industrial midwest, what should we expect about their behavior? And what consequences do these incentives give rise to? First, this situation seems to imply a surge in university enrollments (a good thing); rationally, we would imagine that young people would invest their time, energy, and resources towards getting a good education. But second, these considerations also seem to imply a surge in out-migration to more dynamic regions once it becomes clear that current conditions are likely to persist (a bad thing). So current economic conditions in the midwest seem to increase the chances that significant internal migration will occur in the next few years.

One way of thinking about the likelihood of significant population movement from one economic region to another is to consider the economic capacity of a state or region to support a certain level of income for a given population size. Industrial states in the Midwest were strong economic engines in the 1950s through the 1980s. Steel, cars, and chemicals generated a great deal of revenue every year, and this supported a large and relatively prosperous population. But two things happened: these industries were forced into lower costs and higher productivity -- so the demand for labor fell even when demand for cars remained high. And global competitors appeared on the scene to capture part of the market for these products -- reducing even further the demand for labor. Moreover, both processes led to a premium on skilled labor, thus further reducing the demand for one segment of the workforce.

There is an important implication here: it seems to imply that the basis for a high quality of life for 10 million people in Michigan or Ohio has basically disappeared. If technology and market conditions don't change, then Michigan and Ohio will either lose population or adjust to a permanently reduced standard of living.

We would prefer to believe that we'll find a way out of the box. But looking at things dispassionately, what seems equally likely is a restructuring of population around the new realities of America's economic macroregions. (Texas alone gained 700,000 jobs during the period of 2000-2009.) And this would mean large-scale internal migration, with a "right-sizing" of the population sizes of states and regions around their current economic capacities. (Basically, this is the central theorem of the theory of labor markets: we should expect migration from one region to another up to the point where employment prospects and wages are equal in the two regions.) For Michigan this might imply a loss of population of one or two million people, as workers and their families seek to improve their prospects. Moreover, there is a great risk that among the first to go will be the best educated and most innovative young people; these are the people who have the greatest options throughout the national labor market. And they are precisely the people who will be needed if Michigan or Ohio are to succeed in nurturing a "New Economy."

This scale of internal migration would have enormous consequences on both ends. Communities would be significantly disrupted, as families exit their locations in the social networks of their local communities. This magnitude of loss of population would mean a shift of political representation; for example, Michigan would lose roughly 10-20% of its Congressional seats (depending on the population results for the rest of the country). Michigan's public schools, community colleges, and universities would lose a significant number of students and would need to downsize. The state's fiscal equation would change on both expenditures and revenues. Tax revenues would fall as a result of fewer taxpayers, less business activity, and less aggregate demand and sales tax revenue. But the volume and cost of public services would also fall. So managing change and rationalizing the delivery of public services could actually improve the state's fiscal situation. The ultimate result would be a fundamental transformation of the cultural and social life of the state -- and not in a direction that most people would willingly choose.

Is this just a worst-case scenario? Maybe not. Here is a well researched Detroit News story by Ron French and Mike Wilkinson in April 2009. The story estimates that Michigan has lost 465,000 people since 2001 -- and the number continues to rise. Moreover, French and Wilkinson offer data that confirm that there is a disproportionate number of talented, skilled professionals in the mix -- with substantial costs to the Michigan economy with their departure. Ohio State University economist Mark Partridge is quoted in the article in these words (webpage):

Migration is good for the migrants but bad for the state they're leaving. It's a vicious downward cycle; the best and brightest leave; entrepreneurs don't come to the state because the best and brightest are elsewhere; as more people leave, that leaves fewer people to pay for services. Neither one will make Michigan a very appealing place.

There is a happier alternative, of course -- the creation of a New Economy for the rustbelt. This is what governors like Jennifer Granholm in Michigan and Ted Strickland in Ohio are advocating. Elected officials, economic development experts, and business leaders call for the creation of new and diversified industries for the rustbelt economy. Some experts and politicians point to a new green economy based on alternative energy technologies; others point to the prosperity possible by producing and selling innovations in biological and medical products. And yet others pin their hopes on the encouragement of large numbers of innovative, nimble companies that generate wealth, jobs, and prosperity. Let's hope that some of these strategies will succeed on a large scale. But, as noted in an earlier posting, the challenge is a great one. New economic activities need to create a hundred thousand jobs a year if we are to recover the ground we've lost in Michigan. And that is a large number.

A Michigan job loss tsunami

The whole country knows that unemployment is very high in Michigan, and most people also know that the automotive manufacturing industry has taken a nose dive in the past five years. But the situation is even worse than most people imagine. Bureau of Labor statistics indicate several important facts. In 2000 the total private sector employment in the United States was 110,798,000; by August 2009 this number had dropped to 109,540,000 -- a net loss of 1,258,000 jobs nation-wide. This is a 1.1% drop. In 2000 the number of private sector jobs in Michigan was 3,996,000; this number dropped to 3,213,000 by August 2009 -- a drop of 783,000 jobs (19.6%). This is a shocking number -- one out of five jobs in Michigan has disappeared since 2000.

Other Midwestern manufacturing states also had significant job losses during the period. Ohio lost 9.8% of its 4,840,000 jobs since 2000, and Illinois lost 6.6% of its 5,205,000 jobs since 2000. But Michigan's losses dwarf every other state by a large margin. Among the fifty states and the District of Columbia there were winners and losers; 25 states gained private sector jobs during these years, with Texas the big winner (700,000 new jobs). Altogether 1,952,000 new jobs were created in 25 states and 3,207,000 jobs were lost in 25 states and DC. But consider this: fully 24% of all private sector job losses nation-wide occurred in Michigan during this time period. Think of that: one out of four of all private-sector job losses in the country during these years occurred in one state, Michigan. This could reasonably be called a one-state depression. It is as if a slow-moving Katrina had hit the state, and no one noticed.

So what is needed in order for Michigan to regain its economic wellbeing?

Plainly a 20-30% unemployment rate is unacceptable. So if the state maintains its current population, then the communities, businesses, and government of the state need to stimulate substantial job growth. And we can put some numbers on this obvious truth. If the population remains constant then it would take eight years for the state to recover to the 2000 level if jobs grow at 3% per year. And this would require the creation of about 100,000 new private sector jobs each year.

What would be needed in order to get to 100,000 new jobs per year in Michigan? Here is one pathway: succeed in attracting or creating --

• two large firms of 5,000 workers,
• 10 firms of 1000 workers,
• 50 firms of 500 workers,
• 400 firms of 100 workers,
• 1500 small businesses of 10 workers, and
• 2000 small businesses that expand by three workers.

That gets us to 106,000 new jobs. And it means creating or attracting two large firms, almost 2,000 small and medium businesses, and expanding another 2,000 small businesses. And this needs to happen every year for eight years.

Is this feasible? Is it possible for a state of about 10 million people to create new businesses and jobs on this scale? That is the crucial question for the state of Michigan. And there are many organizations and incubators devoted to this goal in the state of Michigan -- Ann Arbor SPARK, TechTown, Automation Alley, Detroit Renaissance, Michigan Economic Development Corporation, and the Detroit Regional Chamber, to name a few. Further, the universities are doing everything possible to help provide the talented graduates and the new innovations that will be needed for the creation of successful new businesses. But ultimately it is very hard to see how this kind of business creation and job growth can occur year after year.

So Michigan's problem is also a crucial challenge for the nation as a whole. The plain truth is that Michigan has born the largest burden of the decline of manufacturing jobs in the past decade, and the solutions may be beyond the grasp of the state itself. This situation may require intelligent and substantial Federal solutions.

Engaged youth

A while ago I posted on the subject of "disaffected youth". I don't have a basis for estimating the percentage of the youth population that falls in this category, but surely it's a fairly small number in most places. Here I want to focus on the other end of the spectrum -- the relatively small but meaningful percentage of young people who have a significant level of "civic engagement" in their blood.

You can identify some of these young people in almost every city and suburb in America. They are the high school and college students who feel passionately about community service, civic engagement, and "giving back". They are involved in activities like alternative spring break, Habitat for Humanity, and the United Way. They are involved in community service in a major way -- through mosques, temples, and churches, through social justice organizations such as Amnesty International, Big Brother/Big Sister, and Oxfam, and through organized community service programs at universities and high schools. And they are to be found in a big way in nationally organized programs for community service like AmeriCorps, Teach for America, and CityYear.

I've met quite a few of these engaged young people over the past ten years, and they are truly inspiring. They are idealistic in a thoroughly practical way. They see the impact they can have through service, and they understand the importance of designing and implementing service programs in the most practical way possible. They care about the individual people they help -- children, elderly, impaired, impoverished -- in very specific human terms. They understand the value of working together in collaboration and teamwork to accomplish great things, and they understand deeply the values and rewards of racial and religious diversity. Finally, they have very little of the crass materialism of "youth America" as it was portrayed on Beverly Hills, 90210 or other examples of this genre. So this group of young people gives a truly optimistic perspective on our society for the future.

I don't take these points to lead to a generalization about American youth as a group. In fact, what is striking is exactly how atypical these young people seem to be relative to the population as a whole -- and how similar and compatible they are with each other. But it remains the case -- whether 5% or 25%, there is a meaningful minority of today's generation of young people who give a remarkable level of commitment to social engagement.

My question here concerns the social psychology of this group. This is a question about the circumstances of social development that are in place today: where do these young people and their values come from? How has this wonderful mix of optimism, service, and respect for racial differences come about? And how can it be furthered?

One thing is immediately clear: it seems to be unrelated to affluence, race, or neighborhood. A cross-section of the CityYear corps is instructive: young people with very similar social values are showing up from middle-class suburbs, impoverished inner cities, and towns that are neither urban nor suburban. And it is easy to find white kids, rich and poor, brown kids, African-American kids, and Asian-American kids -- all coming together into a corps of 60-150 young people in a given city. None of these groups seems either more or less concerned about social justice, none seems more readily open to learning from peers from other races, and none seems socially and culturally more ready for a serious commitment to engagement and service. In other words, class, race, and income don't seem to be critical in defining today's youth social engagement.

A couple of factors are probably highly relevant to the degree of engagement and civic values that is displayed by young people involved in AmeriCorps and CityYear.

First, there have to be strands of American culture that are creating a "pulse" of concern about social justice and individual involvement in community among young people. This set of dispositions can't be a totally random result. Whether it's a generation of young people acculturated by Sesame Street and Mr. Rogers, or by the broadening circle of awareness of the injustice of racism and poverty, or a "bounce" from the social activism of the sixties generation -- there must be some cultural currents that are making many of today's young people more ready for social involvement and more concerned about social justice. Somehow our society, our families, our schools, and our media are producing a certain fraction of the youth cohort that possess these values and commitments. (Though crucially, we can ask whether that fraction is greater than years past or is pretty much constant.)

Second, recruitment certainly plays an important role in explaining this observation about the similarity of corps members from very diverse backgrounds. AmeriCorps and CityYear members are by no means a random sample of the general population. Instead, they are young people who have actively sought out the opportunity for service presented by these organizations, and they have responded favorably to the very explicit expressions of value commitments they represent.

Another factor that seems to be operative in generating the value orientation of AmeriCorps and CityYear members is the nature of the training and bonding that occurs within the experience. Young people may come to CityYear with positive attitudes about race relations -- but their understanding, commitment, and concrete skills in working in multiracial teams certainly deepens enormously through their year of service. Likewise, what may have been a somewhat thin "will to serve" at the time of recruitment seems typically to deepen into a robust, life-changing involvement in community organizations. The experience of the organization, its leaders, peers, and the service itself leads to a profound deepening of personal engagement.

It's worth dwelling on the causes of youth engagement, because it seems very likely that many of the social problems we will face in the future will only be solved if we can come together as communities of concern, giving our time and our energy to address the serious challenges that are just over the horizon. And these young, engaged people are demonstrating how it can be done.