The Best Economic Development Project You’ve Never Heard Of

Each year, states and municipalities in the U.S. spend more than $70B to grow their economies. It’s a noble pursuit. For any community, growth is life, and decline is a scary prospect.

I’ve spent the last few years criss-crossing the country talking to economic developers and community leaders, whose job it is to bring economic prosperity to their regions, about the challenges they face. I hear that traditional economic development projects can be expensive and slow, many requiring up-front infrastructure investments. Developers worry that the expected payoff won’t materialize if a business fails to live up to their commitments - and many don’t. Plus, most communities & employers worry their regions don’t have enough people to fill the jobs that are being created.

The incentives to attract these projects are typically geared toward the employers themselves. It’s a model that has worked for decades, and continues to be effective as we compete with the rest of the world - but as the demographic challenges of workforce and population continue to persist, it’s important for states and communities to explore other ways to grow their economies.

We’ve developed an approach that doesn’t get the fanfare of a ribbon cutting or headline, but is highly effective, low risk and has the added benefit of growing the workforce and population. What is it? Remote workers.

Tens of millions of professionals in the U.S. are fully-remote, and free to move about the country as they see fit. Their chosen destination will reap an economic reward. These workers are educated and well-paid. They pay taxes. They buy & build homes, and they spend with local businesses. Their families attend schools, churches and other local establishments. Trailing spouses can fill a local job. And the worker becomes a member of the local workforce, able to be recruited by area firms.

I like to think of it as an economic pipeline: when a community like Muncie, Indiana is able to recruit a remote working software engineer with an income of $250,000 from Boston, they’ve effectively created a pipeline of new money (a lot of new money) directly from Boston straight into the Muncie economy. We worked with Drew Klacick, Senior Analyst with the Indiana University Public Policy Institute, to help us quantify the value these workers bring. It turns out that a remote worker making $100,000 per year who relocates to Muncie brings $83,000 in new economic output each year. That’s fast, tangible impact.

It’s because of that impact that many communities have quietly started to turn a portion of their economic development budgets towards recruiting individual remote workers through incentives. It’s working.

In Indiana, the Indiana Economic Development Corporation is implementing a first-of-its-kind statewide program by providing supplemental funding to local municipalities that want to recruit remote workers of their own. So far, 27 communities have joined the effort, and in the first two years of the program, have landed more than 389 new households and 901 new citizens for the state. The average income of these households is $108,000. 80% of the workers have a bachelor’s degree or greater. A quarter of the households bring a spouse who will take a job with a local business. Half of the households bring kids. In all, these new Hoosiers will generate $36.7M in new economic output and will create 220 new jobs each year. Imagine how much they will contribute over their lifetimes!

That is the equivalent of a headline economic development project (minus the ribbon cutting). Think about it - any project that creates 360 new jobs with an average wage of $108,000 in 2 years would be a huge win for the state and generate headlines. That’s $42 million in new annual wages for the state! Here’s the bankshot: every single one of these new jobs is filled by a new, incremental, tax paying citizen - many of which come with a family. And rather than one community benefitting from the new jobs and people, 27 different communities benefited and played a role.

Zooming back out, the sustained rise of remote work represents the most consequential societal shift in the U.S. since the Industrial Revolution. That event produced geographical winners and losers. Workers were forced out of heartland communities and into the job centers of major cities. Today, we are witnessing that dynamic in reverse. Workers are mobile, and many will move in the coming years driven by preference rather than profession. They are in search of quality of life, and a place they feel like they can belong.

The winning communities of this era will be the ones that do the work to welcome these workers and their families the best.

At MakeMyMove, we help communities grow by recruiting new residents. To get your community started, contact us here.