Economic development programs play a pivotal role in fostering growth and prosperity within communities. Economic development success – especially for incentive programs – has primarily been measured by job creation and new investment. While these metrics are important, there’s a growing recognition that they only scratch the surface of what truly matters. New metrics are needed to help tell the story of how business incentives support the economic development mission and ensure that economic development activities benefit people, businesses, and places.
Here we present a summary of alternative economic development metrics that we and our partners have identified in our recent work.
- Workforce Development: Beyond just job numbers, it’s essential to track metrics related to workforce development. This can include the number of individuals engaged in training programs, earnings of program participants, credential attainment, measurable skill gains, and job placements and retention.
- Job Quality: It’s no longer sufficient to focus solely on the quantity of jobs. Metrics related to job quality, such as benefits, hours and scheduling, worker voice and autonomy, job security, working conditions, and skill and career advancement, provide a more comprehensive view of employment outcomes.
- Equity and Inclusion: Metrics can assess the inclusivity of programs and participation of underrepresented populations in economic activities. This includes considering the impact on diverse demographics and examining geographic disparities.
- Long-Term Impact: Programs should consider tracking long-term outcomes, such as the percentage of affected households reaching a sustainable income threshold, or other metrics that reflect the program’s contribution to lasting economic well-being.
- Infrastructure Development: Measuring the creation or renovation of critical infrastructure, such as broadband, helps determine a program’s impact on regional development.
- Regional Governance: Assessing the establishment and effectiveness of regional governance structures, like economic development or workforce coalitions or industry consortia, highlights the program’s ability to foster cooperation and collective action.
- Community Engagement: To ensure programs are relevant to the community, metrics that capture company collaboration with local workforce service and training providers, identify where community voice is incorporated into decision-making processes, and describe participation in community organizations or partnerships with other community groups can be valuable.
- Innovation and Technology Adoption: Helping businesses adopt new technologies and enter new markets is vital for economic growth. Metrics related to innovation, such as patents and research and development (R&D) activities, participation in accelerator programs, technology collaborations, and new technologies or products developed or commercialized can indicate program impact.
- Business Formation and Growth: Encouraging new business growth and entrepreneurial activity is crucial. Sample metrics that can reflect the ability to foster a dynamic business environment include the number of new businesses, private investment attracted, business revenue growth, number of new markets or customers served, firm survival, and the number of high-growth firms.
- Business Assistance: Helping businesses in a community prepare for the next generation economy remains a critical economic development function Assessing the impact of assistance programs in areas like cybersecurity and technology adoption or participation in industry ecosystem programs and partnerships, can convey important information about the value of many business support programs and indicate industry sustainability and competitiveness.
- Global Competitiveness: Measuring foreign direct investment, exports, and participation in international markets can indicate the program’s contribution to regional global competitiveness.
As economic development programs evolve to address diverse community needs, so should the metrics used to assess their impact. These alternative metrics offer a more comprehensive view of how these programs influence the lives of people, the vitality of businesses, and the prosperity of regions. By embracing a more holistic approach to measurement, economic development programs can better serve their communities and drive sustainable growth and prosperity.