Giving Compass' Take:

• Timothy Bartik explains that place-based policies are needed to drive employment to reduce regional inequality.

• How can funders work to create effective place-based policies to drive equitable employment? What work is needed in your community? 

• Learn about place-based policies for the eastern Heartland of America.

You seem to be arguing that economic development policy should shift away from trying to lure companies to a community by handing out incentives and toward investing to develop distressed parts of the country.

If you really want to deal with the employment problems of distressed areas, you need to address the underlying problems that are keeping job creation and employment rates down. What are the problems in a particular distressed area? If you have inadequate skills, you address that. If small businesses have trouble getting services, you address that. If there's an infrastructure issue, you address that. Throwing cash at a problem, for example, through business tax incentives, has limited utility.

What are the key things policymakers should do here?

Job creation is a valuable goal for policymakers to pursue. I'm certainly not advocating that state and local governments shouldn't worry about jobs. Any governor or mayor, any state legislature, any city councilperson, needs to think about job creation, particularly if you're in an area with low-employment rates and low wages. But you need policies that have a good bang for the buck.

Well-run customized services to small and medium-sized businesses can have much higher job creation effects per dollar than incentives. A good example is customized job training programs, where for example, a community college screens and trains workers for a company’s skill needs. Another example is manufacturing extension services. A program might help a manufacturing firm that was bending metal or molding plastic for autos to refocus on bending metal and molding plastic for medical instruments, which might be a better market. These kinds of services to small and medium-sized businesses have job creation effects per dollar that are five to ten times larger than business tax incentives.

I also think we can help local job creation with better policies to promote land development. There's some evidence that infrastructure or land redevelopment can be a more cost-effective way of boosting local jobs than simply handing out cash. Handing out cash is easy. That's part of the reason I think it's attractive to people. It's easy to do, and there's infinite demand for it. Whereas doing these services right is more complicated, but also much more effective.

Read the full interview with Timothy Bartik about place-based policy to combat regional inequality by Richard Florida at CityLab.