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High Unemployment, Growing Skills Gap, Key Concerns Among City Officials

April 9, 2013  |  National League of Cities
A national survey of city officials shows that despite improvement in many economic health indicators, cities around the country report their economies have not yet rebounded due in large part to slow income and job growth. The basic needs of cities' most vulnerable populations are growing, local employer requirements outpace workforce skills, and high unemployment rates continue to plague cities, according to a new National League of Cities (NLC) report.

"While today's report shows some signs of progress, it reminds local leaders across the country that we must continue to drive economic development and job growth in our communities every day," said NLC President Marie Lopez Rogers, Mayor, Avondale, AZ. "We cannot have a full economic recovery if our most vulnerable residents are being left behind; accelerating this turnaround requires strong, common sense leadership in Washington who understand that the health of our national economy is directly linked to strong economies in cities and who are willing to support smart investments in cities."

The 2013 survey of city's chief elected officials signals a sluggish overall economic recovery in cities and towns across the United States, despite a broader national recovery. While just over half (52%) of respondents reported improvement in unemployment, two-thirds of city officials said that persistently high unemployment rates continue to cause economic instability in their communities. Further, the changing nature of the economy has underscored the need for local workforces with skills appropriately matched with local employer demand, but data from cities reflects that a skills gap is actually becoming more prevalent.

More than one in two city officials (53%) report that current local workforce skills are posing a problem for the economic health of their community. An overwhelming number of city officials (88%) also reported that workforce alignment has not improved over the past year. Education plays a factor too; more than eight in 10 (82%) of officials responded that the percentage of their population with a post-secondary degree has not increased.

"The report shows the weight that these barriers have on local economic growth," Christy McFarland, the report's author and Interim Director of NLC's Center for Research and Innovation said. "Workforce development and job creation are integral to the economic health of our communities, and without federal investment in these areas, we will probably continue to see high unemployment, severely hampering cities' economic recoveries."

A majority (56%) of city officials also report that the demand for basic survival services including food, heat, and clothing is a widespread problem in their community, and one in four responded that the condition has actually worsened in the past year.

While the report shows improvement in key indicators of local property tax base, including housing starts, building permits, and residential property values-it also revealed that a weakened real estate market continues to weigh on city's economic health.

Over half of city officials reported that commercial and residential property vacancies and values are still a problem for their communities. This may have continued implications for cities as most receive the vast majority of their revenues from property tax collections.

The survey also revealed the increasing confidence of local officials through anticipated spending and investment activities. More than one in two city officials anticipate increasing investment in 2013 in new infrastructure and capital projects. While these numbers are optimistic, officials remain cautious about proposals to change the tools needed to finance these projects. If the federal government limits the income tax exemption for interest earned on municipal bonds-the primary financing mechanism for local infrastructure projects-61% of respondents report that they would limit the number of projects undertaken; more than half report that they would also reduce the scope of the projects undertaken.

"Protecting the tax-exemption on municipal bonds is just one of the ways federal lawmakers can support economic development in cities," said NLC First Vice President Chris Coleman, mayor, St. Paul, MN. "The report indicates that city leaders are ready to make infrastructure investments, but we must have the confidence from Washington lawmakers that we will be able to secure funding for these much needed projects that drive job creation and improve the quality of life for our citizens."

"This report clearly reinforces the urgency for the federal government to accelerate the nation's growth through smart investments and strategic cuts that will help build healthy local economies," said Clarence Anthony, NLC's executive director. He continued, "Local leaders continue to press for investments in workforce education to train workers to compete in the next generation of jobs, and in infrastructure investments that put people back to work while improving the ability of business to move products around the country.
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