It Is Not About Jobs – It's About Delivering The American Dream

By Edward Burghard,
CEO The Burghard Group LLC,

Ed Burghard
Edward Burghard CEO, The Burghard Group LLC

One of the biggest challenges in being an elected official or an economic development professional is deciding how to best measure your performance. Historically, year-over-year job creation has been relied on as the definitive success measure. Unfortunately, job creation turns out to not be the most reliable measure of performance for either profession.

For perspective, a recent research update article (May 5, 2013) published by the International Economic Development Council suggests identifying a valid measure is a real challenge and use of job creation as a performance measure is problematic. Several reasons cited include:

  1. Job creation statistics do not reflect time invested in a project or the impact of uncontrollable factors. It is extremely difficult to determine your true impact on the total number of new jobs created.
  2. The data is highly variable; it only takes one or two projects to be the difference between outstanding success and epic failure.
  3. The data often isn't an accurate reflection of reality. You typically have to use company projections rather than actual jobs created. And often it is reported as jobs added versus net job growth in the community.
  4. Focusing on a singular measure like jobs often distracts communities from confronting the underlying root cause for being non-competitive.

Another challenge with job creation as a performance measure is that neither elected officials nor economic development professionals actually create jobs. Employers create jobs. The decision to create jobs is based on a company's financial projections and willingness to invest in growth. Often companies succeed or fail in spite of the local business climate. Net, elected officials and economic development professionals may be doing everything exactly right, but if a company's product offering is no longer competitive it may end up cutting rather than creating jobs. And, if the company is a manufacturing firm success may mean improved efficiency and productivity that can result in reduced employment.

Having a relevant and reliable measure to assess the performance of elected officials and economic development professionals is important to creating sustainable economic prosperity for a community. The old adage of "you get what you measure" is so true. When you decide what to measure, you set your goal and predetermine what is going to be important. When you set job creation as the definitive performance measure, then all the focus will be on being able to report a higher number of jobs created this year versus last year. Every choice will be biased toward delivering that desired outcome.

So what's the problem then? Why isn't creating more jobs each year a good goal? As I have thought about it, there are three primary reasons why job creation is not a good goal for a community.

  1. Job creation is not an inclusive enough measure to address the needs of all residents. Consider the national statistics:
    1. The 2010 census data indicates 27% of people are age 19 or younger, a quality education and/or employable skills are likely greater needs than a job.
    2. Based on the same data set, 13% of people are age 65 or older, affordable health and wellbeing are likely greater needs than a job.
    3. According to the SBA, about 9.9 million people (3%) are self-employed; access to capital for growth is likely a more pressing need.
    4. The Bureau of Labor Statistics projects the unemployment rate to be around 7.5% (April 2013).
  2. Not all jobs add equal value to a community. For example, high paying jobs have a greater tax impact than low paying, and some jobs are considered more sustainable than others (e.g. manufacturing versus call centers).
  3. A focus on job creation can lead to poor strategic thinking. Limited attention gets paid to adopting investment strategies that have long-term pay out. Instead, incentive packages with the unintended consequence of masking competitive deficiencies become popular. It also becomes virtually impossible for an elected official or an economic development professional to reject pursuing any opportunity that has incremental jobs associated with it. This has the potential for rewarding poor stewardship of taxpayer dollars.

Eclipse Aerospace
Eclipse Aerospace located in New Mexico in part due to the state's high quality of life, said Ed Lundeen, SVP of business operations at Eclipse. According to the American Dream Composite Index, New Mexico is the second best state in the U.S. Photo courtesy of Eclipse

A better measure of performance for elected officials and economic development professionals is progress in enabling residents to achieve the American Dream. This measure addresses many of the shortcomings that job creation exhibits as a measure. For example, it is a desired outcome by virtually every resident of a community. It leads to a broader discussion on the important enablers of the American Dream including financial situation, personal wellbeing, trustworthiness of institutions, tolerance of differences, and quality of the physical environment. And, it recognizes the interdependency of the aspects of life making up the American Dream and requires community leaders to engage in critical trade-off discussions when making strategic investment choices. Most important, it holds elected officials and economic development professionals directly accountable to the people.

Xavier University has created the American Dream Composite Index as a way to gauge resident sentiment on how well they are doing at achieving the American Dream. In my opinion, the ADCI is a far better metric than job creation to measure performance of elected officials and economic development professionals.

I am often asked how Xavier University defines the American Dream. They don't define it as a statement. The ADCI survey evaluates respondent assessment of 139 statements to create 35 statistically validated dimensions that represent the American Dream. These data then make up the ADCI score. The data is currently available on a national and state level, and consideration is being given to making the data available at a major metropolitan level.

However, based on their ongoing review of the thousands of responses collected, the best characterization of the American Dream continues to be the one penned by James Truslow Adams in his book titled The Epic of America – "The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement."

Ultimately, the goal of any elected official or economic development professional should be to enable their residents to better achieve the American Dream. The strategic investment choices they advocate/make with taxpayer dollars should be consistent with that goal in mind. If this happens, the end result will be creation of sustainable economic prosperity for the community as a whole.

To understand where your state ranks in enabling the American Dream, you can download the 2012 American Dream State Ranking Report

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