Three Workforce Trends to Watch in 2018

January 26, 2018

By: Caroline Alexander, senior consultant, TIP Strategies

Over the past decade concepts like full employment, the skills gap, and the gray tsunami—once primarily of interest to workforce professionals—have become pressing concerns in the economic development arena. Technological disruptions from automation and control engineering to digitalization and artificial intelligence, continue to cast a shadow on the future of jobs. In the face of these challenges, here are three trends that are worth paying attention to over the short term as you consider your community’s ability to support business growth.

1. The US Economy at Full Employment

Economists spent much of 2017 debating the point at which the nation’s unemployment rate dropped below “full employment,” a threshold where all workers who are willing and able are employed. There is little question however, that the most recent rate of 4.1 percent (December 2017) falls well below that mark. And there are indications it may decline further. The national unemployment rate, however, masks the underlying story of disparity. Race, educational attainment, and geography play a significant role in determining the labor outcomes of individuals. As a result, in spite of low unemployment at the national level, there are a number of pockets of available and potentially under-utilized labor pools.

For more, check out our Tableau data visualization, “The Economy at Full Employment?

2. Looming Retirements

According to the US Bureau of Labor Statistics, 23 percent of employed individuals will be eligible to retire in the next 10 years, implying a potential turnover of up to 35 million jobs. This transition will require a massive transfer of institutional knowledge within organizations as these experienced workers depart the labor force. While large companies have the training infrastructure to make sure this transition is relatively smooth, most small- and medium-sized businesses are not well-equipped for succession planning or for the kind of on-the-job training that will be required for this changing of the guard.

3. Digitalization of Industry and Jobs

It is no secret that digital technology has been, and continues to be, integrated into the workflow of a wide range of occupations, from low-skill to high-skill jobs. From handheld devices that delivery drivers use to record signatures to high-capacity super computers, most jobs now involve some kind of digital human-machine interface. A recent study [PDF] by the Brookings Institution found that the share of jobs requiring high and medium digital skills grew from 45 percent in 2002 to more than 70 percent in 2016. This implies that basic digital literacy has become essential for all workers—in the same vein as reading, writing, and arithmetic. Yet, large segments of the population remain without access to broadband, PCs, and even good cell service.

These trends are not new. Nevertheless, they will continue to influence labor markets in 2018 and to shape the fields of economic and workforce development. More importantly, these trends highlight the need for meaningful workforce planning—more, better, faster. While the future of jobs may be uncertain, one thing is clear: rapid technological advances and an insatiable demand for new workers with new skills will continue to be dominant trends in 2018.

Three Defense Sector Trends to Watch in 2018

January 25, 2018

By: Alex Cooke, senior consultant, TIP Strategies

The major theme for the US defense sector in 2018 continues to be uncertainty. Congress remains under immense pressure to raise defense spending due to ongoing military operations, decreased readiness, and aging weapons systems. However, addressing these challenges will require Congress to pass a budget that removes the spending caps mandated by Budget Control Act of 2011, which Washington currently seems unable to accomplish.

1. Defense Spending and Procurement

On January 19, 2018, the Trump Administration revealed its new National Defense Strategy [PDF]. Going forward, the Pentagon will place a higher priority on preparing for potential high-intensity conflicts with near-peer adversaries (namely, China and Russia). This new strategy will require increased levels of US defense spending on big ticket weapons and hardware. Large procurement programs being pushed by the administration include modernizing the US nuclear force, growing the number of ships in the Navy’s fleet, accelerating the deployment of ballistic missile defenses, and integrating electronic warfare systems into all service branches.

2. Long-Term Planning by the Pentagon

Federal budget uncertainty prevents the Pentagon from proceeding with long-term planning initiatives related to staffing and bases. Therefore, we are unlikely to see critical decisions made in 2018 regarding a future Base Realignment and Closure (BRAC) round or force levels within the Army.

3. Private Sector Activity for Aerospace and Defense

Despite the dysfunction surrounding the US federal budget, the aerospace and defense sector is poised for continued growth in 2018. The United States remains by far the world’s largest arms supplier, and global demand for advanced US weaponry shows no signs of abating. In fact, ongoing conflicts and rising tensions in the Far East and Europe will only stoke increased global demand for American arms.

Despite all the disarray and turmoil at home and abroad, let’s hope peace prevails in 2018.

Three Companies to Watch in 2018

January 24, 2018

By: Ashton Allison, consultant, TIP Strategies

Many US firms are poised to accomplish great things in 2018, which made narrowing down our top selections quite challenging. The companies we chose stood out, given the strategic moves they made in 2017 and the potential implications of these decisions on their respective industries and on our way of life in 2018.

1. Amazon

A no-brainer, we know. The behemoth online retailer recently shortlisted 20 communities for its second headquarters location and will announce the lucky winner sometime this year. The company also acquired Whole Foods in 2017, which is certain to cause further disruption in the grocery industry. Be sure to keep an eye on its formidable competitor, Walmart, which has made sizable investments in its online footprint and strategy.

2. Boeing

For starters, Boeing was one of the best performing stocks of 2017, with shares soaring nearly 90 percent. Shares gained another 16 percent in the first three weeks of 2018. This growth is due, in large part, to the proposed purchase of Brazilian rival Embraer, the profitability of the 787 Dreamliner, and anticipation of a possible new middle-of-the-market aircraft (replacing the 757). And despite occasional setbacks for Boeing, investors remain optimistic about new aircraft orders from major airlines around the world.

3. Virgin Galactic

While several companies are jockeying to be the first to commercialize space travel and are making great strides in doing so (Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX included), Richard Branson’s Virgin Galactic recently completed another test flight. This accomplishment, combined with Branson’s statements at an October 2017 press conference, signal Virgin’s plans to make a manned trip to space (with Branson on board) in the next 12 months.

Grab some popcorn and join us as we find out who will make headlines in 2018. It’s sure to be a fascinating year.

Three Urban Development Trends to Watch in 2018

January 23, 2018

By: John Karras, senior consultant, and Allison Long, project coordinator, TIP Strategies

Urban development trends, such as coworking, experiential retail, and big-box redevelopment will continue to impact US communities (large and small) in 2018. Economic developers, take notice! Creative approaches to development challenges will abound in the year ahead.

1. Experiential Retail

As visits to brick-and-mortar store locations diminish, retailers around the country are re-thinking how to attract customers to their stores. Often, these efforts employ methods that allow customers to try products before their purchases. These methods might include anything from taste-testing to virtual-reality changing rooms. It could also mean the creation of appealing, mixed-use environments to boost foot traffic. Competition from online shopping has encouraged retailers to look beyond their products for innovative ways to provide what online retailers cannot—a memorable experience.

2. Big-Box Redevelopment

The strategy of redeveloping empty big-box stores took on a sense of urgency as store closings escalated in 2017. According to Bloomberg, even the most stable department stores are billions of dollars in debt. Over 6,700 retail stores closed between Q1 and Q3 of 2017. Vacant storefronts serve no one’s interest—neither the property owner nor the local community. But what are the options? Examples of successful reuses include both public and private efforts. Educational institutions, gyms, call centers, churches, and libraries are just some of the examples of reuse strategies that can breathe new life into defunct real estate. In 2018, we expect even more creative schemes to emerge as solutions to retail obsolescence.

3. Coworking

The concept of coworking space has been around for a long time, but only recently have socio-economic, cultural, and technological trends converged to rebrand it for a new generation of workers. The coworking model is thriving across the country in part because it offers a range of solutions for established companies and startups alike. In addition, coworking spaces have played an important role in transforming aging districts into attractive urban environments. Cambridge Innovation Center (CIC), founded in the 1990s, served as an early coworking model for later imitators. CIC was a major contributor to the evolution of MIT’s Kendall Square and has gone on to spearhead similar coworking experiments in the US and Europe. WeWork is now the largest global coworking space provider, with more than 10 million square feet of space across 285 urban office locations in 60 cities worldwide.

As we continue to abandon the traditional for exciting new ways to shop, work, and use our urban spaces, we’re sure to see changes in our landscape―both physical and economic―in the year ahead.

Three Technologies to Watch in 2018

January 22, 2018

By: Jon Roberts, principal, and Alix Collins, TIP Strategies

Technology creeps into our lives as a gradual trickle, infiltrating unnoticed until we wake up one morning and everything has changed. When was the last time you heard the peck, peck, peck of a typewriter? Or saw an outdoor television antenna in someone’s backyard? Or paid all your bills by writing and mailing checks? Only in hindsight is it possible to understand the vast changes wrought upon our lives by the onslaught of new technologies. Stay tuned. More changes are on the way. Of the many emerging technologies to watch, we spotlight three to keep an eye on in 2018.

1. Smarter Transportation

First there were seat belts. Then airbags. By 2018, many car models already incorporate advanced safety features like collision avoidance and lane detection. Where to from here? Think ACES: Autonomous, Connected, Shared, Electric. ACES is less about any one element than it is a wave of change sweeping the mainstream concept of transportation. Every major automotive manufacturer is looking beyond the internal combustion engine and building increasingly sophisticated software into their cars.

But cars require infrastructure of equal sophistication. A Mercedes needs its autobahn, right? This interdependence may explain why so many cities are rethinking the transportation grid to accommodate automated vehicles and new technologies for managing traffic and physical infrastructure. We expect to hear more about smart transportation in the coming year as local governments and manufacturers follow the technological momentum. Yes, profound changes are occurring across all aspects of transportation as we know it.

2. Blockchain

Blockchain has the potential to reduce transactional costs of doing business by removing intermediaries (e.g. lawyers and banks) and allowing individuals to complete transactions in a secure and transparent way. While the focus on blockchain has primarily been on the financial services sector, this technology has broad implications for government and business [PDF]. Blockchain technology has not yet become a discernible part of daily life for most of us. However, it is gaining momentum rapidly and is likely to become an integral feature of our existence in short order. In 2018, you’re likely to hear more about blockchain technology as it continues to transform our economic infrastructure.

3. Implantable Devices

You may have heard press reports in the last year about a Wisconsin company, Three Square Market, that offered its employees the option to have a chip implanted into their hands. Safety concerns immediately arose, but the CEO predicted that this technology will eventually be used as our passports, or to pay for public transportation or other purchases. We expect use of this technology to grow in 2018. And why not? We already place microchips in our pets for identification purposes. In fact, we have been enjoying the benefits of implantable medical devices for a generation, with pacemakers being the most obvious example. Implants that communicate with other devices and with our medical providers will become increasingly common.

We anticipate you will become more familiar with these three technology trends in 2018, whether through news coverage or perhaps through direct personal experience. We can expect these technologies to become fully integrated into our daily lives much sooner than anyone would have predicted even a year ago.

The Economic Potential of Fort Worth, Texas

By: John Karras, senior consultant, TIP Strategies

The economic potential of Fort Worth, Texas—soon to be the nation’s 12th largest city—is tremendous. In April 2017, at the start of our engagement with the City of Fort Worth, we pondered the question, “What does it mean to be a global city?” Fort Worth is well on its way to finding out. Leaders from the City and the broader business community have embraced Fort Worth’s position as a major US city. In December 2017, the City unveiled its first economic development strategic plan. The TIP-lead initiative provides a comprehensive roadmap to guide the community’s growth over the next five years.

The plan’s launch received a flurry of media attention. The op-ed from the Fort Worth Star Telegram underscores the importance of this plan to Fort Worth’s future. The Fort Worth Business Press provides an additional perspective. Dallas Innovates emphasizes the critical role of entrepreneurs in Fort Worth’s future growth. Adding to the momentum, the Fort Worth Chamber recently unveiled its new strategic plan (summarized in this Fort Worth Star Telegram article), which aligns the Chamber’s programs to work in concert with the City’s economic development initiatives.

Many thanks to our partner consultants, Fregonese Associates, JLL, and Isaac Barchas , who added their expertise on a range of issues including urban redevelopment, site selection, and entrepreneurship throughout the planning process.