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Deepen Industrial Clusters

State Job Creation Strategies for 2011

The fundamental challenge in this recession is that the growth that preceded it was a mirage. Bubble era borrowing created a network of financial jobs, real estate jobs and construction jobs that collapsed with the end of the bubble. Many of those jobs will never return.

An extremely high proportion (75%) of job losses in this recession are permanent rather than temporary. States will need to nurture completely new industry sectors and the infrastructure to support those jobs, while the jobless will need retraining in new skills to participate in those sectors.

State Job Creation Strategies Part II: Supporting Innovation, Industrial Clusters and Green Job Creation

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. 

State Action for the Unemployed

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.

Overview

Beyondsupporting individual technology firm startups, states are increasingly lookingto support interrelated "clusters" of firms that reinforce innovationin a region around specialized industries, much as the car industry grew up inDetroit, the film industry in Los Angeles, finance in New York City, and as aparadigm of the high-tech economy, Silicon Valley became a source ofongoing computer-related innovation.

Statescan play a critical role in promoting such clusters beyond supportinguniversity research and funding new startups by identifying key local assets,facilitating relationships among firms, deepening the talent pool, andencouraging investments that reinforce those cluster needs—a pointemphasized by the National Governors Association in a recent report, Cluster-BasedStrategies for Growing State Economies.