Nurture Regional Innovation and Flexibility

As we described last week in State Job Creation Strategies Part I: Finding the Money and Investing in Human Capital and Physical Infrastructure, competing globally for jobs starts with policy makers instituting fundamental investments in education, human capital and physical infrastructure that make their state a productive environment for economic innovation. The next step, as this Dispatch will describe, is helping the private sector leverage opportunities for job creation and technological innovation. 

On Thursday, the official unemployment rate climbed to 8.1% nationwide as employers shed an additional 651,00 workers last month. Add in sharp rises in the number of involuntary part-time and long-time discouraged workers, and the unemployment rate rose to 14.8%. While long-term job growth is the goal of the recovery package, states need to, and some are already stepping up to, address the immediate needs of the unemployed. This Dispatch emphasizes key programs states can take advantage of to help their unemployed workers.

Florida Governor Charlie Crist recently signed an economic stimulus plan for the state that redirects $1.95 billion of the state's pension fund into direct investments in Florida's economy. The amount is limited to 1.5 percent of the state's pension money, but even that limited percentage can add up to massive investments in jobs for the state's residents.

In creating the program, legislators and the Governor pointed to the success of similar programs in other states, particularly the California Public Employees' Retirement System (CalPERS), the nation's largest pension fund. A recent study found the California fund's in-state investments had fed an estimated $15.1 billion into in-state economic activity in 2006 and created 124,000 jobs, more jobs than the construction or motion picture industries.

As the country enters into a recession and suffers increasing job losses, the Great Lakes Region is facing a particularly acute crisis. Literally millions of decent-paying manufacturing jobs have disappeared from the region in recent years.  How regional political leaders are responding to that crisis provides lessons for state policymakers across the country.

In an increasingly global economy, states struggle over what policies can encourage the growth of high-value local jobs and high-technology industries that can compete.