OP-ED | Sustainability: Invest in People
It is easy to talk about the economy, or should I say criticize.
The factors that influence the economy are many. One area of focus that has become a fan favorite is whether our economy is “sustainable.” I admit, I have been seduced by the catch phrase that is a darling of both the fiscally conservative and the socially progressive. The concept is broad enough to encompass renewable energy and the need to invest in transportation.
I have seen presentations about whether our economy is sustainable. They seem similar to presentations about the deficit or the budget. They talk about the bad news under a new label. We have an unstable tax base, very high per capita debt or sinister unfunded liabilities.
What is lost in the conversation about what makes an economy sustainable is an analysis of the engine — the means of producing revenue that supports everything. True, we often talk about jobs. How could you not? This gets us close to the core, but we can — and should — go deeper. What keeps the economy churning? What pays for everything?
Approximately 50 percent of our annual budget is derived from the income tax. People.
Approximately 20 percent comes from our sales and use tax. People.
More detail results in similar insights. Capital gains, property or corporate taxes? At the core, human activity drives revenues.
If people are not productive, an economy is not sustainable.
If we cannot increase the productivity of all of our state citizens — both public and private - our economy will not be sustainable. Revenue will continue to decrease and service needs will increase. This is the core concept of sustainability. The Economics of People.
All citizens means just that. The long term unemployed — in Fairfield County and in our cities. The underemployed. Folks recently released from prison. Young adults — especially in cities.
The most important infrastructure investment is in people. Not to worry. Our nation’s history has shown that when we invested heavily in human capital, we led the world in productivity, academic achievement and standard of living. The returns are real.
This is not simple stuff. There are several moving parts. There is a continuum of investments that lead to a productive citizen. They are not always present. If there is a break in our strategy, we risk investing in people that leave, as is presently the case when we provide an excellent high school education to many young adults that will never work in Connecticut. The jobs aren’t here and they leave.
The front end starts with caring about the environment in which our youngest are raised. When needed, start early with programming designed to address specific needs. Research has established that our cities contain a demographic that needs skills, but also that jobs don’t exist. These problems don’t fix themselves. If we invest in early childhood education, ask “What, where, why” and later “Did it work?”
When appropriate, our young adults should be matched with skills that lead to employment within Connecticut. Engage the private sector early. Incentivize employers in ways that are meaningful, and they will hire folks. They want to grow and they need good employees.
Measurement is critical because revenues are at a premium and they cannot be spent in a frivolous manner. Also, we are in the midst of a hyper-partisan crisis where government credibility is nil. Rightly or wrongly, one of the results of an extended national recession is that taxpayers need to be shown results to establish trust in government. This is not a bad thing.
I attended the CBIA 2014 Economic Update several weeks ago. The President of Stop & Shop New England, Joe Kelly, told a story that struck me as uniquely applicable to our state’s situation. Joe is a great guy. A former neighbor of mine when he lived in Connecticut, he literally worked his way up from the deli counter to the boardroom in classic Horatio Alger style.
Joe relayed a management conversation where the debate centered on whether the company invested too much in employee development. A cost-conscious manager said “What if we invest in employees and they leave?” To which the President responded:
“What if we don’t invest and they stay?”
Brian O’Shaughnessy of New Haven is a principal in the firm Community Impact Strategies Ltd. The mission of CIS is to facilitate the investment of public and private capital for the purpose of creating measureable improvements in human productivity and living conditions.