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The Business Incentives Data Collection and Management Workshop in Portland, Oregon, brought together 20 states to share ideas on how to address common challenges in analyzing and administering economic development incentives. This is a summary of the topics we discussed and our main takeaways.

Why we use incentives

Economic development organizations use incentives to achieve a variety of economic development goals for  states and communities, including but not limited to job creation. In short, incentives are not just about completing a deal. However, we need to do a better job communicating what economic development is (and isn’t), articulating our strategy and goals, and explaining how incentives are used to attain those goals.

What we measure

Better data and metrics can help us tell this story and improve decision-making to achieve better outcomes. Data and metrics should be connected to:

• Economic development goals – including community development, workforce development, and business development & innovation, as well as business retention and attraction
• Individual incentive program objectives and purpose
• Measurable outputs and outcomes

How we measure – data sources

Obtaining data for the metrics we care about is not always easy. It requires resources and commitment, but is becoming increasingly important in today’s open government environment.

We discussed two main categories of data sources:

• Information from the incentivized company – obtained primarily via the initial application and milestone reports, but also surveys, site visits and audits as needed.
• State administrative records – especially tax and workforce data, access to which generally requires relationship building and MOUs to ensure data confidentiality and appropriate use. See the CREC report “Balancing Confidentiality and Access: Sharing Employment and Wage Data for Policy Analysis and Research” for great guidance on how to overcome challenges that inhibit data sharing among agencies.

Takeaways

1. Define program goals clearly
2. Align metrics with program goals
3. Consider data sources and availability when choosing metrics
4. Use consistent definitions (the definition of a new full-time job, for example) and reporting mechanisms across similar programs
5. Go beyond job counts
6. Enable data sharing via statute and/or MOUs with other state agencies

Better data collection and management for incentive programs will be valuable for economic development organizations because it will:

• Show what EDOs are accomplishing through incentives, demonstrating progress toward economic goals and indicating whether you are meeting program objectives
• Improve decision making by providing insight into what programs work best
• Help communicate the work EDOs are doing on behalf of their states and communities by generating high-quality information to report to external audiences

 

This program was part of the Business Incentives Initiative, which is designed to “improve decision-makers’ ability to craft policies that deliver the strongest results at the lowest possible cost” by identifying better ways to assess and report on incentive programs.

The Business Incentives Initiative is a joint project of the Center for Regional Economic Competitiveness (CREC) and the Pew Charitable Trusts. Smart Incentives is pleased to be part of the CREC team working on this effort.