Tackling deindustrialisation and low pay – lessons from the US

Inclusive growth is a global challenge. Amongst advanced economies, it is especially pressing for the UK and the US, which have experienced persistent and entrenched inequalities over the past few decades. US cities are trying to address the economic disparities that hold them back, and there is much place leaders here can learn from them

“[lack of] inclusive growth is not an abstract issue, but one with a real human price”

- Bill de Blasio, Mayor of New York City at the launch of the OECD Inclusive Growth in Cities initiative, April 2016

My colleague Charlotte Alldritt visited Washington DC last week, to discuss how the US and its cities are responding to the challenge of inclusive growth and what it might teach us about ways forward (watch Charlotte’s 'inclusive growth' interview with Richard Reeves, Senior Fellow at the Brookings Institution). The conversations reinforced some of the learning the Inclusive Growth Commission has taken from case studies in the US, and below we look at New York City and Pittsburgh.

The case for inclusive growth is being made the world over. Whether by the IMF and its call for more ‘inclusive capitalism’, or by the OECD in its recent Inclusive Growth in Cities initiative, international leaders are demanding a change in the rules of the game. Economic growth needs not only to benefit the lucky few, but to provide opportunities for all. As the OECD explains: “In just about every area, whether it be educational attainment, life expectancy, or employment prospects, success is disproportionately determined by socioeconomic status, wealth and assets, sex, age or the places where people live."

Two American cities which have shifted resources into tackling long-term inequalities are New York City and Pittsburgh (Brookings Metro Report 2016 - Pittsburgh is one city which has seen improvements across all three indicators in recent years). Both have involved the integration of economic and social policy in ways described in our interim report and in ways that few UK cities have considered. Can we imagine, for example, a London mayor guaranteeing every citizen a route to quality employment and career progression, not matter what sector they in? This is the kind of political leadership that could spur business, civil society and local government into action. New York and Pittsburgh continue to have significant challenges that demand still more ambitious policy, but they have started their journey towards inclusive growth.

Mayor de Blasio Speaks at Building Inclusive Cities; conversation with London Mayor Sadiq Khan at La Guardia Community College in NYC

New York City: Career Pathways Framework

What is it?

In response to rising inequality and poverty in one of the world’s most successful cities in the world, the mayor Bill de Blasio launched the NYC Career Pathways Framework. This framework forms part of the One NYC strategic development plan that envisioned “an inclusive, equitable economy that offers well-paying jobs and opportunity for all New Yorkers to live with dignity and security. The initiative is based on three key pillars: 

• Building the skills employers want by connecting workers to quality jobs. This framework included sector-focused Bridge programmes, skills training, job-relevant curricula, and work-based learning opportunities for in-work progression.
• Improving job quality – supporting workers in lower wage jobs through initiatives that ‘raise the floor’ and reward worker-friendly business practices, such as increased job security for low-paid work.
• Increasing system and policy co-ordination - aligning economic development initiatives with training and employment services, to promote career pathway development and implementation.

What it tells us

The Bridge programmes were able to give low-skilled individuals the opportunity to embark on either sector-specific skills training or basic education incorporated into specific occupation training. This has given individuals who were previously shut out of highly skilled jobs due to lack of educational attainment an opportunity to enter in at a higher level. HIRE NYC, which explicitly targets low income workers, local hire and public assistance recipients as part of the city’s public procurement processes.

Key outcomes

It is too early to tell, but early indications justified an annual doubling of funding, to $50m a year, and similar policy levers are now in use in Boston, Philadelphia, San Francisco and Los Angeles.

Pittsburgh: Strategy 21

What is it?

A long-term strategic plan that sought to remake Pittsburgh economy and launched in 1985 by the city government, in close collaboration with the Presidents of Carnegie Mellon University and University of Pittsburgh. It was a ‘call to partnership’ that embraced public and private agencies and civic actors throughout the city, region and state. The goals of the plan sought to “reinforce the region’s traditional economic base, convert underused land, facilities and labour force components to new uses especially those involving advanced technology, enhance the region’s quality of life and expand opportunities for women, minorities and the structurally unemployed.” It meant investing in the city’s universities which in effect created anchor institutions that attracted high value research and development to the region. The plan also initiated the reuse of derelict steel plants and mills along the city waterfront in line with the demands of the new twenty-first century economy such as the Pittsburgh Technology Centre. It has also led to a range of other cross-sector initiatives, like for example the Pittsburgh Sprout.

What it tells us

Pittsburgh’s strategy is an example of long-term strategic focus on achieving inclusive growth, involving all the different sectors across a city, to concentrate resources according to local needs.

Key outcomes

According to the Brookings 2016 Metro Monitor Report, Pittsburgh is also one of 37 of the 100 largest metropolitan areas in the USA that posted improvements in all three prosperity indicators across three-, five- and ten-year time periods. It also ranked thirteenth out of 100 metro areas with respect to inclusion during the ten-year period from 2009–2014 where average wage growth was the seventh fastest in the United States and posted a 5.6 per cent change in median wage.

Its metro region has been able to pivot from an economy significantly dependent on steel production to emerge from deindustrialization with competitive core sectors in advanced manufacturing, energy, healthcare, financial and related services and information technology. This renewal is largely credited to the impact of civic leadership, an integrated approach in governance and the employment of public-private partnerships with a long term view to develop the city region.

_{Please send us your examples of inclusive growth in action from across the world so we can populate our map of inclusive growth activity around the world in the run up to the Final Report (March 2017).}