BSU economist tells city current economic strategy is backwards

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GOSHEN — Standard economic development policies trying to lure big companies, which were put in place decades ago and still widely practiced today by local governments, are not working.

That was the message from Mike Hicks, director of the Center for Business and Economic Research at Ball State University, to the Goshen City Council this week.

Hicks, an economics professor at Ball State, traveled from Muncie to Goshen at the invitation of Adam Scharf and Mike Orgill, two new members of the Goshen City Council. Scharf and Orgill have raised concerns about economic development policies employed in the city.

The economic development practices now common started in the 1950s with the idea that bringing in large companies would create a large number of jobs. Those practices worked when people commonly moved for jobs, Hicks said.

But the opposite has been happening over the last two decades.

“Simple, economic growth is happening primarily where people are,” Hicks said.

He believes communities should put the focus on things like enhancing quality of life and maintaining quality schools, which will draw people. More people will encourage development of service-based businesses and, little by little, jobs.

Hicks also spoke about footloose jobs — jobs that can go anywhere because the goods they produce are not necessarily consumed locally. Factories or corporate headquarters that export goods are examples of footloose jobs.

“Since 1969, the United States has been a jobs creation machine. About 90 million net new jobs,” Hicks said. “None of them are footloose jobs. We’re actually down 2 or 3 million footloose jobs since the 1960s, and yet almost all of our economic development policies are focused on attracting those footloose jobs.”

Hicks said more people are now moving because of schools and other public services, so economic development policies focused on attracting businesses, but neglecting schools and other services, are missing what’s really causing population changes.

The good news, he said, is that leadership understands these changes. Hicks said he expects legislative reform to help adjust to the ongoing population change dynamics.

“And I think most local governments are starting to make adjustment as well,” he said.