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Draft 1.1 -- Not for Distribution or Circulation BOX: Hard Questions about Cabarrus County's Corporate Attraction Record Over the past decade economic development in Cabarrus County has been led by the Cabarrus Economic Development Council, and much of its activity (in dollars, hours, and resources) has been focused on attracting outside business. The EDC argues that between 2004 and 2011, this strategy succeeded in bringing 2,711 new jobs into the county. To evaluate the efficacy of this approach, the County should endeavor to answer, with EDC's assistance, the following questions: • Statistical Significance -- To what extent do the new jobs created fall within the expected growth rate of jobs within the economy (that is, what would occur with no economic development whatsoever)? According to the Kauffmann Foundation, the economy generally can be expected to gain 18% new jobs in a typical year and lose 16%. In 2004 Cabarrus County had a labor force of about 77,000. Over eight years the natural job creation should have been 119,000 new jobs gross and 13,000 net. Thus 2,711 jobs represents about two percent of gross job creation. Critics of industrial policies like these suggest that public policy would be wise to focus on creating growth conditions for local businesses responsible for the 98% of job creation. • Causality — How decisive were EDC initiatives in various corporate decision to come to Cabarrus County? Most researchers have concluded that incentive packages offered are such a small fraction a corporation's bottom line that they actually have very little impact on siting decision. Far more important are the proximity of a qualified workforce, input suppliers, readily available land, or target markets. Most companies make these assessments — and their siting decisions -- before the incentive negotiations even begin. • Job Retention — Were the jobs attracted enduring or temporary? The Research Campus in Kannapolis has yet to produce more than a tiny fraction of the jobs initially promised. The collapse of North Carolina's lauded deals around Google and Dell are reminders of what can go wrong. • Living Wages — Do the jobs attracted pay high wages? If not, the jobs delivered have the potential to drive down labor costs and reduce family incomes. The attraction of Great Wolf Lodge, a popular resort paying minimum wage jobs that's responsible for a fifth of the jobs attracted, raises this question. • Resident Employment — To what extent were jobs created for existing residents who are unemployed? The national data are that about 80% of the jobs attracted are taken by workers who read about the new project and move to the community. 16 Attachment number 1 1 -4 Page 318