Comments on Tax cuts and tech jobs won't solve DC unemployment - Greater Greater Washington

Comment by oboe

Sat, 14 May 2011 21:06:14 EDT

Seriously improving DC's unemployment problem - especially east of the river - starts with accountability in the DC public school system.

Nope. Improving DC's unemployment problem ends with an improvement of DCPS. You're mistaking cause for effect.

Comment by Coop

Sat, 14 May 2011 10:30:50 EDT

Seriously improving DC's unemployment problem - especially east of the river - starts with accountability in the DC public school system. The current system, in which private schools are the only viable option for achieving a worthwhile education in the District, creates a vicious cycle in which at-risk kids have little chance of success. This creates a culture of de-facto segregation, inequality and animosity that instills the bad habits mentioned above (lacking common courtesy in service jobs, showing up on time, dressing appropritely and communicating with a basic level of civility and professional respect). Until we address the education issue, future generations are almost predestined to fail. Based on first-hand experience, reforming the DC teacher's union is the best place to start.

Comment by Jasper

Fri, 13 May 2011 14:00:17 EDT

@ David Alpert: You were basically saying, "how can you be arguing this, when you argued this other thing I dislike before?" That's a kind of ad hominem attack, where you are disputing a point based on the person who wrote it instead of based on the point itself.

I must not have been clear. I was trying to say: How can Ken say A, when he argued -A before (in an article that I indeed did not like, but that is besides the point). That is not an ad hominem attack. That is asking writers for this blog to be consistent in their opinions. I would expect that when writers are allowed to use quite inflammatory language and positions in their pieces, readers can remember that language and those positions and use that information in subsequent debates to show that authors are inconsistent. That is not an ad hominem attack. That is using people's own words against them. I can not help it that those words were nasty. I did not write them, nor editing them.

Comment by Patrick Thornton

Fri, 13 May 2011 13:18:36 EDT

University of Maryland. A top computer science program.

Nowhere near Tyson's Corner.

Comment by oboe

Fri, 13 May 2011 11:27:37 EDT

I don't get the "First Source" thing at all. Is there any evidence that this kind of protectionism works at all? Is there a First Source program in MD to funnel jobs to MD residents? Or VA? Seems to me money might be better spent on making DC residents hireable rather than making employers hire them.

Comment by Martha Ross

Fri, 13 May 2011 10:49:34 EDT

Ideally, economic development and workforce development would be done together, so that the city would 1) strategically attract and retain key industry sectors, while 2) helping District residents improve their skills, education and work readiness, and 3) matching qualified residents with employers who are ready to hire them.

But so far the city's economic development strategy has seemed to focus on real estate deals, which is important but now that we're a strong market city we need to act like it, and think more strategically about what sectors we'd like to keep and grow. And there's no workforce development strategy to speak of, although Mayor Gray did highlight the issue in his campaign more than any other candidate in recent memory (which in my case goes back to Williams.) He understands that we need a system, and for the different elements - K-12, adult education (GED, ESL, etc.), job training, community college, and so on -- to work together much better than they do now. Making it happen is much harder.

Some colleagues and I wrote some briefs on this recently:

Transforming Workforce Develoment in the District: Building a Strong Leadership Structure and Contributing to an Economic Opportunity Agenda

Reforming First Source: Strengthening the Link Between Economic Development and Jobs

http://thecommunityfoundation.wordpress.com/2010/12/21/new-year-new-mayor-new-ideas-for-workforce-development/

And lastly, the figure that 37% of DC residents are at the lowest level of literacy should be taken with a grain of salt. My main point is that, yes, the problem is hugely bad and demand for adult ed swamps supply and for now I'm not going to worry about exactly what the number is.

The more technical info is that the 37% figure is an estimate based on an estimate, using national survey data from the 1992 National Adult Literacy Survey then put into a model that used Census demographic info to generate jurisdiction-level estimates.

In 2003, the Dept. of Ed fielded another national survey, the National Assessment of Adult Literacy, and then did more estimating for state/local estimates, and came up with the figure that 19% of DC residents have the lowest level of literacy skills. I don't think the 19% and 37% can be directly compared because the measures aren't defined in quite the same way. Unsatisfying, I know.

http://nces.ed.gov/naal/estimates/

Comment by oboe

Fri, 13 May 2011 10:38:19 EDT

DC's unemployed also aren't jobless due to a lack of jobs. They simply lack the skills that even the bulk of existing jobs demand. More than 40% of jobs in DC require a college degree, while nationally only 20-22% of jobs require a college degree. Yet 36% of DC residents are functionally illiterate.

I might add that DC's unemployed aren't jobless due to a lack of "skills", except in the broadest sense of the word. You've touched on the real problem here in mentioning literacy. But when you look at some of the more successful jobs programs, you see that the skills they teach are things like, "getting to work when your shift starts", "dressing appropriately", and "Saying please and thank you."

A true cynic would say that DC's unemployed are jobless because they're largely unemployable. The optimal solution would be to provide housing, day care, and a bare minimum level of employment: make-work jobs that you can't get fired from, and in which you don't have to interact with the public in any way.

Obviously that's got to happen at the national (or at least regional level). But it's the only thing that would address the problem on the scale needed. Our current system produces rare individual success stories, but leaves the fundamental numbers unaltered.

Comment by oboe

Fri, 13 May 2011 10:20:39 EDT

The real failure is the DC education system that churns out too many people who would struggle in a less skilled economy, let alone in one the knowledge centers of the US.

No, the real failure is national (and regional) poverty policy. The most glaring local symptom of that failure is the DC education system. Asking why DC can't get it's act together is just buck-passing.

Comment by David Alpert

Thu, 12 May 2011 22:36:30 EDT

Sure, Jasper. You made a sort of ad hominem attack against Ken. There seem to be a small number of people who seem to think they have made up their minds about Ken based on one article, and every time they see his byline, they say something about that other article instead of about this one.

We have a rule that you need to discuss the point being made, not the person. You were basically saying, "how can you be arguing this, when you argued this other thing I dislike before?" That's a kind of ad hominem attack, where you are disputing a point based on the person who wrote it instead of based on the point itself.

You seem to be already having your comment in mind as soon as you read the byline. That's not appropriate and comments of this nature will be deleted.

Comment by Jasper

Thu, 12 May 2011 22:25:28 EDT

Can a moderator explain to me why a comment has been removed twice?

Comment by SJE

Thu, 12 May 2011 17:42:19 EDT

DZPost: I think that these incentives are stupid, as it raises taxes on existing businesses and gives a tax break to those new businesses that have good lobbyists. Its much better to have an educated workforce, clear regulations and decent taxes. However, the municipalities feel that they need to offer incentives to get employers because they didnt do right what they were supposed to do: educate their kids.

Comment by JustMe

Thu, 12 May 2011 15:55:20 EDT

However, companies need to understand their presence or lack thereof, creates or leaves an "employment footprint," has a demographic "impact." A pioneering spirit devoid of preconceived bias and elitist ideals will motivate intelligent, forward-thinking executives to change the paradigm.

Excuse me, but the language of this blog is English. Please use it when making comments.

Comment by SJE

Thu, 12 May 2011 15:48:03 EDT

Completely agree. Its not only stupid and wasteful, but cruel to tell people that all we need to do it attract one more company and then everyone will have jobs. The real failure is the DC education system that churns out too many people who would struggle in a less skilled economy, let alone in one the knowledge centers of the US. Its about as reasonable as telling 7ft tall men that they can be professional jockeys just as soon as we get enough horse racing in DC, instead of telling them about the NBA.

Comment by Alex B.

Thu, 12 May 2011 15:41:10 EDT

@ahk

Huh? That's the whole point - add more space to the popular locations, and the price will come down for existing space in and adjacent to those same locations.

And you're wrong, there is indeed a voracious appetite for space at all price points in good locations. The District has lots of those 'good locations,' and not enough space to meet demand.

Likewise, on the start-up front, there's the challenge of having existing space available for companies instead of building new space to meet that demand - it's a bit of a chicken and the egg problem.

Comment by ahk

Thu, 12 May 2011 15:22:44 EDT

Alex B. There isn't a voracious appetite for space, there's a voracious appetite for cheap space in highly popular locations.

The two are mutually exclusive. There's plenty of near-in office space that's vacant or could be easily built out, but it's not in the central downtown area.

You're confusing wants with needs.

Comment by DZPost

Thu, 12 May 2011 14:38:32 EDT

"Tech Ghetto?" Um folks, if all you techies really want the perceived benefit of cost-competitiveness, knowledge base, and proximity to D.C., a more pioneering spirit will certainly help. I see Tech companies as no different than other industries. Ultimately, profit margins dictate location. The problem is: most, if not all companies, are not subject to pay a penalty for their decisions to "up and leave" a community. Yet, when they first consider the community, they make all kinds of promises about hiring the "so-called" locals. Exhibit 1 (Gaylord). First, of course, they need tax incentives and waivers, etc. Then, after meeting profit goals, they suddenly find the community less competitive, or they find ways to get around meeting agreed upon hiring initiatives. So, sure; any good self-respecting capitalist can understand the need to conduct business with a profit. However, companies need to understand their presence or lack thereof, creates or leaves an "employment footprint," has a demographic "impact." A pioneering spirit devoid of preconceived bias and elitist ideals will motivate intelligent, forward-thinking executives to change the paradigm. Perhaps locations like southern Prince George's County may just offer an equal if not greater knowledge base as well as prospects for greater profits?

Comment by Alex B.

Thu, 12 May 2011 10:24:35 EDT

@ahk

No one is saying that raising the height limit will lower unemployment.

The argument is this: raising the height limit enables the District to add supply to meet the voracious demand for space - which can then lower the cost of renting office space, which end better enables start-up companies to form and later remain in the District.

Comment by Burger

Thu, 12 May 2011 10:18:29 EDT

While Ein likely overstates that high rents is a driving issue. He is correct that more tech companies in DC would likely drive unemployment down and not just for college educated hipsters by through secondary support hiring. An increase in companies, tech or otherwise, means more filled office space. That means more income for use at local retail stores and restuarants. That also means more hiring at support staff positions - janitors, cleaning crews, facility operations, etc. Those hires would come from the unemployed, under-educated in DC.

Not everyone can go to college, nor should they, but as Judge Smalls says "the world needs ditch diggers, too."

An increase in high end companies means more low end hiring to support them i.e. a rising tide raises all the boats.

Comment by ahk

Thu, 12 May 2011 09:46:37 EDT

I laugh in the face of anyone who thinks employment will go up because of the height limit. You guys are such sycophants.

Unless someone pays a manufacturer to move to DC, the vast majority of DC's unemployed will never move off of the dole and I'm not even sure that will work. The sad fact is that without welfare reform, no one currently on welfare has to go to work for any significant period of time. They've made conscious decisions to put roadblocks in their own ability to get jobs (chemical dependency, criminal violations, food related obesity issues) and it's a small enough town, that they have a strong political class willing to trade lifetime support for votes.

The carrot of "a better life for your children" really doesn't resonate.

Comment by Jordan

Thu, 12 May 2011 08:34:57 EDT

UMD is in the DC metro area and has a top 20 CS program:

http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-science-schools/computer-science-rankings

PG county could do more to foster graduates to start companies around UMD.

Comment by kk

Thu, 12 May 2011 08:30:07 EDT

Height limits are not a factor in this. There is land in DC available its just not downtown, move your ass outside of downtown and you will probably find atleast one forsale sign along or off of a major road.

Just because it is not in the preferred area or by a metrostation does not make it useless. There is land in DC outside of downtown plus further land in PG County or eastern Montgomery County which could be used its just that some are afraid to do so.

Comment by KevinM

Thu, 12 May 2011 07:54:09 EDT

First- height limits are not likely to be relaxed any time soon, due to security reasons.

Second, there isn't enough space here to begin to address the societal reasons why the DC population is not educated enough for the new tech jobs- suffice it to say that it absolutely has to do with racism and discrimination in American society, if we are honest with ourselves.

Comment by RichardatCourthouse

Thu, 12 May 2011 02:30:22 EDT

Space downtown is so expensive in large part because it offers unparalleled access to the Federal government. Therefore, firms that need that access either because they primarily serve the government or lobby it (including non-profits) will be willing to bid up space that is nearby. For tech firms (or any other firms) that don't work with the Feds so much, it makes more sense to pay less for equivalent space elsewhere.

I'm not necessarily for much taller heights downtown on balance, but reducing rents to attract more diverse industries does seem to be one good argument in favor. Of course, rents would still have to be pretty expensive to justify new high-rise construction.

Comment by Richard Layman

Wed, 11 May 2011 22:09:28 EDT

The whole reason I came around on the height issue is because of this point, as well as how the constant expansion of the Central Business District comes at the expense of extant neighborhoods.

But if the height limit were to be changed tomorrow it would take decades before it would begin to have substantive impact on rents.

Frankly, DC never had that many of the "large old buildings" that industrial cities have, buildings that turn out to be great for adaptive reuse and for use by start up type innovative businesses.

The place that did, what is now called NoMA, lost most of the buildings in the 1980s and 1990s. But regardless, the fact that market businesses can be outbid by nonmarket businesses (as mentioned by JustMe) trumps the building stock.

It's why, btw, I submitted an amendment to the Comp Plan for CM zoning, to disallow schools and churches as matter of right uses, because that creates yet another non-business non-market competition for industrial space. OP turned it down.

Where the buildings tend to remain is along the railroad corridors, but these places tend to not have a lot of amenity value.

The warehouses owned by Jemal/Douglas Development near Rhode Island Metro could be recaptured for this type of use and over time the area could become "hipper." But other buildings that could serve similar uses are church-owned now, so there is a real limit on available inventory.

Note that CUA wants to create a research park, maybe, on the land it acquired from AFRH, which is west of Harewood Road, across from the campus.

Comment by Alex B.

Wed, 11 May 2011 21:05:36 EDT

Well, we can always relax the height limit and build more density to meet all that demand for space... what a novel solution!

Comment by JustMe

Wed, 11 May 2011 18:24:03 EDT

Everyone in DC -- from renters to entrepreneurs -- is competing with foreign countries and foundations willing to provide expense accounts for their individual employees and organizations. A profit-driven company concerned with cost-cutting and the bottom line can't compete with a foundation or foreign government that can simply write a check for whatever the "going rate" is.

Comment by John

Wed, 11 May 2011 17:10:32 EDT

David/Ken,

If it had stayed as just a critique of Ein thesis on DC's unemployed I wouldn't have said anything. Absolutely correct that this does nothing for the DC unemployed, as that is a skill-set problem.

However, it didn't stay there, it went into a spurious "and it doesn't matter anyway because places would still go out to the sticks since it's that's where tech is" argument.

"I co-founded a tech company in the District in 2000 that now has 60 employees and is headquartered in Tysons Corner. We moved there despite very high rents for two reasons. First, my partners who live in northern Virginia would have far longer commutes into the District than I would have to Tysons. Second, Tysons Corner is where the potential software partners and vendors are—it's where the action is."

This presumes that it all just magically happened and lo and behold, it just spontaneously is "where the action is". That's where I called BS, and where to blunt Ein is correct. There is a self-perpetuating tech corridor in the sticks which started for the reasons Ein states, along with Execs hosing staff for their own personal interest.

1. Taxes are lower for them in sticks VA.
2. Rents were, and in the case of exurb tech ghetto of Reston/Herndon are still lower. (BTW - We won't even discuss that this is an implicit offloading of business expenses on staff, trading lower company costs for higher commute costs + lost time).
3. Exec choice, which may be based on the above (ex. companies who keep the execs downtown, and put staff in the ghetto) or just personal convenience to their lifestyle choice (ex: Ken's partners).

So while Ein's solutions won't impact the structural DC unemployment, they would make DC more competitive for these businesses. Especially as energy costs make staff recruitment to the ghetto harder and harder. A business that is at a central location, on transit will have an advantage recruiting new people.

That's my point of contention here. If it comes across as harsh, it's because I spent four years in hell reverse commuting to the ghetto, and taking a hassle for not moving out there by upper management. Luckily, I'm now high enough up the chain to laugh at folks who try to recruitment me away to the ghetto again (last time I said I wouldn't talk to them w/out a $20k "gas and annoyance" offset for Reston), but it still grates.

Comment by charlie

Wed, 11 May 2011 17:10:03 EDT

@Joey; there is plenty of rent cheaper than that in DC. Ask any nonprofit. Of course, the building is pretty crappy.

In fact, I'd say associations/think tanks/policy centers pretty much drive the startups out of that market.

Comment by Joey

Wed, 11 May 2011 16:49:18 EDT

There are all kinds of reasons why northern Virginia is more of a tech hub than DC. For that matter, the Dulles Corridor is much more of a tech hub than Arlington.

But I wouldn't be so fast to dismiss real estate costs as part of it. Rents downtown (and in Rosslyn) are in the $50–70 per-square-foot range (that's per year). Thus, a floor of office space that seats 100 people costs about $1.5MM per year.

Rents out in the Dulles Corridor are half that.

Sure, of course, there are all kinds of external costs to the Dulles Corridor (car, parking, gas, environment). Of course it makes it difficult for residents living in denser areas inside the Beltway to reach. But for a startup first moving out of a garage, the internalized real estate cost is a huge difference (esp. for the early guys, if they already have cars and/or are spread out geographically).

From my experience in Atlanta, where the tech/entrepreneurial community is a bit smaller than DC, but way, way, tighter, it sort of revolves around a state-owned incubator called ATDC, associated with Georgia Tech and offering subsidized office space. It serves as a central gathering spot not just for new startups, but for classes, speeches, symposiums, and networking events. When companies "graduate" from the incubator, many stay in the city proper.

There's just nothing like that in DC. There's an utter dearth of incubator space.

My recommendation for the District to become more of a tech hub: subsidize a well-run incubator with inexpensive office space in the range of $15–25 per square foot, with shared resources like copy rooms and break rooms. Startups could begin life there and then inch their way out.

Hell, locate it in one of the new empty buildings near the ballpark. Rents there are cheaper, and there are higher vacancy rates. The landlords there might even be willing to work with DC to establish an incubator there with cheaper rents, with the hope that growing companies would move into nearby space at market rents when they "graduate" from the incubator.

Comment by charlie

Wed, 11 May 2011 16:29:51 EDT

I've seen a persistent pattern in about 10 tech companies.

They start off in DC, usually just founders, get nurtured here, but soon as they start adding employees move out to Tysons.

Why? The biggest explanation I got was parking. As a startup, they didn't want to be paying so much for employee parking downtown.

Interesting that the largest "tech" company in the area both founders live in Georgetown.

Comment by Ken Archer

Wed, 11 May 2011 16:22:16 EDT

There is a wide body of research showing that in corporate HQ location decisions, proximity to the home of the CEO or other senior staff has a huge influence.

I couldn't agree more. It's one of the most profound structural injustices in cities today. Offices move close to owners, who live close to people like them, thus removing whole classes of folks from access to jobs. It's a return of the old boys club in a guise that feels less objectionable.

So, what to do about it? The reality is that not only is it government contracting that sustains much of the NoVa tech hub, and not developers living in DC (most live in the burbs anyway), even if we could lure tech companies to DC I don't think it would make a dent in DC unemployment.

I want to do something about the horrible joblessness in the District, and am trying to provoke a conversation about what can be done by exposing the false, feel-good solutions of Ein and Mayor Gray as ineffective.

Comment by David Alpert

Wed, 11 May 2011 16:04:42 EDT

Sure it does. I'm just saying John's comment blaming Ken for wanting to locate the company where it's an easy commute makes no sense since Ken has a very difficult commute personally.

Comment by Alex B.

Wed, 11 May 2011 16:00:42 EDT

David,

There is a wide body of research showing that in corporate HQ location decisions, proximity to the home of the CEO or other senior staff has a huge influence.

Comment by David Alpert

Wed, 11 May 2011 15:58:26 EDT

John: Ken lives in Georgetown, owns no car, and takes transit every day to Tysons.

You definitely can't possibly accuse him of wanting to be in Tysons for his convenience. His partners, maybe.

Comment by John

Wed, 11 May 2011 15:49:01 EDT

It is to people who want to live in a walkable actual city. There is also the "tech ghetto" in the Roslyn/Herndon area under the same reason.

Disingenuous also, to pretend the "tech corridor" just magically occurred because techs love themselves some exurbs. It exists because of the taxes and cheap rents in exurb office parks, as well as Execs who want to have short drives from their homes outside Leesburg (this is the story of why Fannie Mae threw their staff into the ghetto, the tech Exec at the time wanted a short drive.

Comment by jj

Wed, 11 May 2011 15:47:21 EDT

Following on what Richard said, I live in Dupont and would kill to be able to walk to a tech job in the District instead of taking Metro to the burbs, and I know I'm not the only one. I wonder if there will be a generational shift kind of like how the Silicon Valley firms keep having to set up shuttle buses to their sprawl campuses for their highly paid young employees who want to live in hip San Francisco neighborhoods.

Like Richard says, that wouldn't be any direct solution for poor unemployed in the District, but follow-on demand for services could spring up in a District neighborhood with urban amenities the office workers could walk to (instead of gazing out the window at a parking lot like I do all day).

Comment by david

Wed, 11 May 2011 15:42:51 EDT

@John - I'd hardly call Tysons the boonies. It's in a county with 1 million residents.

Comment by Richard Layman

Wed, 11 May 2011 15:20:43 EDT

These are really two very different issues:

1. Dealing with DC's chronic unemployed in terms of getting them employable;

2. Having DC be a better place for technology-knowledge based firms.

WRT (2), rents, or the lack of as JJ referred to it, "a large stock of old buildings" with low basis costs and low rents and therefore attractive to start ups, is an issue.

So is the type of potential clients and their location. A lot of the opportunity is based around military applications, etc., which isn't based in DC.

And of course where the people are located.

It's interesting that Blackboard is in DC. This makes sense as there are a bunch of universities, plus the higher education assns., etc.

But mostly DC is the location of managers/headquarters pieces of organizations, not the operations divisions, so the likelihood of business development is reduced. (You mention Porter's work but Saxenian's is also very relevant to this issue, in her differentiation of large scale vs. smaller scale businesses in her discussion of the differences between Rte. 128 and Silicon Valley as places to do business.)

But if DC had better engineering colleges maybe it would be a bit different. Even so, lots of professors at schools like CUA create businesses, but they don't locate them in the city.

I would argue that dealing with making DC more attractive to technology startups is important, irrespective of dealing with the problem of chronic unemployment.

And dealing with either requires more nuanced initiatives than those proposed by Mark Ein.

Comment by greent

Wed, 11 May 2011 15:14:23 EDT

Is there an industry that could employ the 30% of Ward 8 that is unemployed, yet find a home in a knowledge-based economy?

If there is no knowledge base, how can a home in an environment requiring that knowledge be found?

The answer is key to the city's ability to wash the moral stain of 30% of its children living in poverty.
The District is not responsible for poverty, and it is not responsible for raising children (unless in jail/ward of citystate).

For bad public education opportunities, yes, DC is responsible. But placing all responsibility on a government exempts parents/caregivers and all other societal factors.

Comment by John

Wed, 11 May 2011 15:09:46 EDT

Shorter, faster Ken:

"Tech jobs won't help the poor. Besides, I and my fellow executives _like_ locating in the boonies as it's convienent for _our_ commutes. Staff to our firms aren't poor, so I don't care about 'em. They can go commute to where it's convenient for executives, or go hump it.

Thanks, Ken"

Comment by Alex B.

Wed, 11 May 2011 14:58:36 EDT

There is a key difference, however, in comparing tax rates in Germany (a country) and California (a state) to DC (a city). If a company wants to locate in Silicon Valley, they have to be in California. If a company wants to locate in the DC region, they do not have to be in DC proper.