October 9, 2017; Crain’s Detroit Business
NPQ’s Steve Dubb recently wrote a newswire suggesting that the incentives offered by localities to corporations need to be more realistically vetted for real community benefit. But, in the excited scrum occurring around the search for a site for Amazon’s second headquarters, is this likely?
In Michigan, four large foundations are working with the city of Detroit to try to land the Amazon deal being shopped around like a Powerball ticket to cities in need of jobs. As we reported last week, Amazon is promising 50,000 jobs to the lucky city that offers up enough incentives to make it worth their while—and “worth their while” reportedly involves the development of a talent pipeline.
If the bid were won, it would mean job opportunities not only for Detroit, but for neighboring Windsor, Canada. Unfortunately, there are 35 cities in the running, and in terms of desirability, Detroit is fourth from the bottom of that list, according to a recent study. Prime among the obstacles is a lack of a ready workforce. The study found that the city would need to address this issue head-on to be a contender.
Overall, there are 59 members of the Amazon Bid Committee, which includes some familiar local philanthropic players—among them, the Kresge Foundation, the Skillman Foundation, and the Ralph C. Wilson Foundation. The Wilson Fund is the only local foundation focused largely on workforce development. It is a spenddown foundation with $1.17 billion under its control. Also involved is the New Economy Initiative (NEI), which is aimed at expanding existing businesses in the area. It’s housed at the Community Foundation of Southeast Michigan and is capitalized by Ford, Mott, Kellogg, and other major national foundations with a Detroit interest.
Of course, there are other job creation and retention strategies that do not depend upon attending overwhelmingly to the centralized production needs of a large corporation. These strategies often have much greater impact but grab far fewer headlines.
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Deborah Groban Olson of the nonprofit Center for Community-Based Enterprise, whose group has helped both 12-person Arbor Assays and the 750-person Zingerman’s Community of Business in southeast Michigan implement forms of employee ownership and is currently working with a range of partners in Detroit, says that in metro Detroit, 400,000 jobs could potentially be lost as baby-boomer business owners retire. She adds that 70 to 80 percent of those owners have no succession plan, a number well backed by business research. Olson advocates for converting more of these existing businesses into employee-owned shops, a structure under which successful businesses could spread the wealth.
Of course, similar statistics exist elsewhere. The late John Logue, who founded the Ohio Employee Ownership Center in Kent, Ohio in 1987, famously noted that “a failure to plan for ownership succession is the number-one preventable cause of job loss in the United States.”
Similar stories exist elsewhere, too. In Providence, Rhode Island, for instance, a group of community activists argue that the 700-person local Benny’s chain, which operated 31 stores (slated to close by year’s end) and where “an ocean of beach chairs commingle with a surprisingly good toy section, and with great auto mechanics to boot” might have been saved, if only state and local legislation had passed to make conversions to employee ownership easier.
Nationally, a study by the Oakland, California-based nonprofit Project Equity shows that 2.34 million private businesses in the US are owned by baby boomers, most of whom will retire in the next 10 to 20 years. That’s 24.7 million jobs, maybe half of which are seriously at risk, for those who are counting. And yet economic development departments and foundations across the country still prefer to dedicate their resources to chase after the new-tech versions of “smokestack” industries, like Amazon.
In terms of stabilizing the economy, Olson, based on research compiled largely from the National Center on Employee Ownership, writes that employee-owned businesses are four times less likely to lay off workers during a recession and 25 percent more likely to stay in business over a decade. They also have 25 percent more job growth than businesses that are not employee-owned.—Ruth McCambridge