1. Community Development Core Competencies for Extension Professionals in the North Central Region

2. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 2 Foundations of Practice The Foundations of Practice: Community Development Core Competencies for Extension Professionals is composed of three major components: Understanding Communities and their Dynamics Developing Successful Community Initiatives Areas of Specialization and Emphasis

3. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 3 Understanding Communities and their Dynamics Basic Understanding of Community Community Demographics Community Economics Community Power Structure Natural Resources and Sustainability Community Situational Analysis Community Development Process

4. Community Development Core Competencies for Extension Professionals in the North Central region Community Economics

5. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 5 Community Economics This presentation has been adapted from an original presentation developed by Bill Pinkovitz Professor University of Wisconsin Extension Center for Community Economic Development

6. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 6 Learning Objectives Define local economy and learn how money and resources flow into and out of a community, and circulates within a community. Learn the meaning, and importance of a community’s economic base and and how to identify and analyze basic industries.

7. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 7 Learning Objectives Learn how to use traditional economic analysis tools to gain insights into local economies Learn new innovative ways to use existing data sources to analyze local economies from a different perspective. Learn how to access and use new powerful web based tool to analyze local economies

8. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 8 A Few Definitions com.mu.ni.ty a group of people in a physical setting with geographic, political, social, and economic boundaries, and with discernable communication linkages. Shaffer, et al e.con.o.my A system of human activity directed toward meeting human needs and wants by the deliberate allocation of scare resources (land, labor, raw materials, and capital).

9. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 9 A Few Definitions e.con.o.mic growth more jobs, more income, more sales, more customers. e.con.o.mic de.vel.op.ment social, environmental, and economic change to enhance quality of life Shaffer, et al

10. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 10 Some Perspective Employment

11. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 11 Some Perspective Income

12. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 12 The Local Economy Local Production Land Local Consumption Labor Raw Materials Capital

13. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 13 Local Production Land Local Consumption Labor Raw Materials Capital Dollars flow into and out of the local economy: $ $

14. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 14 Dollars flow into the local economy in several ways: Local goods and services sold outside community $ $ Raw Materials Manufactured Goods Labor Insurance Transportation Financial Services Capital

15. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 15 Dollars flow into the local economy in several ways: Local goods and services sold outside community $ $ Visitors purchasing Local goods and services Tourists Regional Mall University Health Care Second Homes

16. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 16 Dollars flow into the local economy in several ways: Local goods and services sold outside community $ $ Visitors purchasing Local goods and services Public dollars flowing into community AND other “non-earned income” Social Security Gov. Purchases Federal Grants Government Offices Military Bases Dividends Interest

17. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 17 Dollars leak out of the local economy in several ways: Local businesses purchasing goods and services outside the community Raw Materials Inventory Equipment Labor Capital Professional Services Financing Investments $ $

18. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 18 Dollars leak out of the local economy in several ways: Local consumers purchasing goods and services outside the community Regional Malls Internet Sales Travel Transportation Financial Services Investments/Savings $ $ Local businesses purchasing goods and services outside the community

19. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 19 Dollars leak out of the local economy in several ways: Taxes and Social Security Payments Federal/State Taxes Soc.Security Payments $ $ Local businesses purchasing goods and services outside the community

20. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 20 Dollars leak out of the local economy in several ways: Taxes and Social Security Payments Natural Resources Inefficiencies Opportunity Costs $ $ Local businesses purchasing goods and services outside the community Waste/Inefficiencies

21. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 21 How Does the Local Economy Grow? Increase INFLOWS Decrease OUTFLOWS Increase the TRADE AREA

22. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 22 Strategies to Grow the Economy Attract new basic employers Improve the efficiency of existing firms Improve ability to capture dollars Encourage business formation Increase aids from broader governments Glen Pulver

23. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 23 Basic Employers Basic Employers a.k.a Export Employers A basic employer is a business that brings money into the community. Businesses that sell most of their goods/services to non-local markets. A business where the inflow of dollars into the community exceeds the outflow of dollars from the community. Typically, basic employers include: ManufacturingUniversities/Colleges FarmingHospitals MiningInsurance Companies TourismTransportation

24. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 24 Non-Export Businesses Businesses that primarily serve the needs of the local consumers are called non-export businesses.

25. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 25 Why the FOCUS on Export Businesses? Basic (Export) businesses provide the best opportunity to create additional jobs and income in a community. Unless a community is growing rapidly, or its trade area is expanding significantly, increasing the number of non-export businesses simply means that the pie (market) will be cut into smaller slices, or existing businesses will disappear as new ones emerge.

26. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 26 Community Economic Analysis Defining a Community’s Trade Areas Identifying Export Businesses in a Community Identifying the Competitive Sectors in a Community Estimating the Total Impact of Economic Activities

27. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 27 Defining a Community’s Trade Areas Identifying Export Businesses in a Community Identifying the Competitive Sectors in a Community Estimating the Total Impact of Economic Activities Community Economic Analysis

28. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 28 Defining Trade Areas: Defining Trade Areas: Traditional Methods Reilly’s Law: Method for determining a community’s retail trade area. Based on the premises that 1) People are attracted to larger communities to shop. 2) Peoples willingness to travel to shop is influenced by time and distance.

29. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 29 Defining Trade Areas: Defining Trade Areas: Traditional Methods Trade Area Capture: A method for estimating the number of customer equivalents who shopped in community for a specific product type (i.e. furniture). Based on state per capita spending for the product adjusted by local per capita income. Most often utilizes Census of Retail Trade data. Most useful when comparing TAC over time.

30. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 30 Defining Trade Areas: Defining Trade Areas: Traditional Methods Pull Factors: A method for estimating the number of customers a community attracts from outside the community for a specific product or service (i.e. furniture). Simply estimated by dividing the Trade Area Capture by the municipal population. Most often utilizes Census of Retail Trade data. Most useful when comparing Pull Factors over time

31. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 31 Defining Trade Areas: Defining Trade Areas: Using GIS Trade Area Analyst LT: An easy-to-use application utilizing Geographic Information Systems (GIS) software that enables users to easily map variety of markets by ZIP Code. Customers Employees Patients Visitors

32. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 32 Defining a Community’s Trade Areas Identifying Export Businesses in a Community Identifying the Competitive Sectors in a Community Estimating the Total Impact of Economic Activities Community Economic Analysis

33. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 33 Location Quotient: A simple index that helps identify export and import industries by comparing the percentage of local employment in a specific industry to the percentage employed nationally in the same industry Identifying Export Businesses Identifying Export Businesses Location Quotients % of local employment in industry A % of national employment in industry A LQ =

34. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 34 Location Quotient Location Quotient Employment by Sector http://www.BLS.gov Total Employees (2004) U.S.IndianaAllen Co, In Total Employment108,490,0662,451,737160,610 Manufacturing14,257,380571,48129,504 Construction6,916,398147,8909,980 Retail15,060,686332,90020,163

35. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 35 Employment by Sector Percentage of Total Employment (2004) Source: BLS.gov 18.4% 23.3% 13.1%Manufacturing 6.2 6.0 6.4Construction 12.613.613.9Retail Allen Co, InIndianaU.S.SECTOR 18.4% 13.1% = 1.40 LQ =

36. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 36 Location Quotient Location Quotient by Sector SECTORU.S.IndianaAllen Co, In Manufacturing1.01.771.40 Construction1.0 0.950.97 Retail1.0 0.980.90 Source: BLS.gov

37. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 37 Location Quotients Manufacturing Employment (2004) Source: BLS.gov County % of Total Employment Location Quotient Allen Co, Indiana18.37%1.40 Daviess Co, Indiana23.961.82 Elkhart Co, Indiana54.554.15 U.S.13.141.00

38. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 38 Interpreting LQs LQ > 1.25Export Industry LQ <.75Import Industry LQ >.75 and < 1.25Self Sufficiency

39. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 39 Location Quotients Location Quotients A simple tool to help identify local: Export and import industries Existing and potential industry clusters Economic strengths Development prospects

40. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 40 Calculating LQs Calculating LQs The Good News U.S Department of Labor Bureau of Labor Statistics Quarterly Census of Employment and Wages http://www.bls.gov

41. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 41 http://www/bls.gov

42. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 42 Location Quotients Location Quotients http://www.seta.iastate.edu/takecharge/ Take Charge

43. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 43 Location Quotients Location Quotients http://www.seta.iastate.edu/takecharge/

44. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 44 Defining a Community’s Trade Areas Identifying Export Businesses in a Community Identifying the Competitive Sectors in a Community Estimating the Total Impact of Economic Activities Community Economic Analysis

45. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 45 Why employment changes Growth or decline in the national economy Growth or decline in the industry sector Relative strength of the local industry/economy

46. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 46 Shift Share Analysis Shift Share Analysis provides an estimate of the impact of these three factors by separating the increase or decrease in local employment in specific industry sectors into three components: 1. National Growth Share 2. Industrial Mix Share 3. Local Share

47. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 47 Shift Share Analysis National Growth Share: The increase or decrease in local employment that is attributable to the growth or decline in the national economy. Industrial Mix Share: The increase or decrease in local employment that is attributable to the growth or decline in a specific industry sector. Local Share: The increase or decrease in local employment that is attributable to the relative strength or weakness of the local industry/economy.

48. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 48 National Growth Share National Growth Share Employment Trends by Industrial Sector LaGrange County, IN (1994 to 2004) Sector Employment (1994) Employment (2004) Change % Change Manufacturing5,4885,8413536.4% Construction 30244113946 Leisure/Hospitality 73792418725.4 Financial Activities 305264-41-13.4 Public Administration 118-3-27.3 Educ./Health Services 1,5561,645895.7 Total Employment10,687 11,9789669.04 local employment in industry A year 1 x average national total employment growth rate for the period = National Growth Share 302 jobs x

49. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 49 National Growth Share National Growth Share % Change in Employment by Industrial Sector LaGrange County, IN (1994 to 2004) SectorLaGrange Co.IndianaU.S. Manufacturing6.4%-9.1%-16.1% Construction4610.9 37.8 Leisure/Hospitality25.420.4 25.4 Financial Activities-13.42.2 16.3 Public Administration-27.36.9 8.6 Educ/Health Services5.719.725.2 Total Employment9.047.8914.9 local employment in industry A year 1 x average national total employment growth rate for the period = National Growth Share 302 jobs x.149 = 45 jobs

50. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 50 Industry Mix Share Industry Mix Share % Change in Employment by Industrial Sector LaGrange County, IN (1994 to 2004) Sector LaGrange County IndianaU.S. Manufacturing6.4%-9.1%-16.1% Construction4610.9 37.8 Leisure/Hospitality25.420.4 25.4 Financial Activities-13.42.2 16.3 Public Administration-27.36.9 8.6 Educ/Health Services5.719.725.2 Total Employment9.047.8914.9 local employment in industry A in year 1 x (national industry growth rate – national average growth rate) = Industry Mix Share 302 x (.378 -.149) = 302 x.229 = 69 jobs

51. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 51 Local Share Local Share % Change in Employment by Industrial Sector LaGrange County, IN (1994 to 2004) Sector LaGrange County IndianaU.S. Manufacturing6.4%-9.1%-16.1 Construction4610.9 37.8 Leisure/Hospitality25.420.4 25.4 Financial Activities-13.42.2 16.3 Public Administration-27.36.9 8.6 Educ/Health Services5.719.725.2 Total Employment9.047.8914.9 local employment in industry A in year 1 x (local industry growth rate – national industry growth rate) = Local Share 302 x (.460 -.378) = 302 x 0.082 = 25 jobs

52. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 52 Employment Trends Employment Trends by Industrial Sector LaGrange County, IN (1994 to 2004) 45 jobs (NGS) + 69 jobs (IMS) + 25 jobs (LS) = 139 jobs Sector Employment (1994) Employment (2004) Change % Change Manufacturing5,4885,8413536.4% Construction30244113946 Leisure/Hospitality73792418725.4 Financial Activities305264-41-13.4 Public Administration118-3-27.3 Educ./Health Services 1,5561,645895.7 Total Employment10,68711,9789669.04

53. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 53 http://www.seta.iastate.edu/takecharge/ Tippecanoe County, Indiana

54. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 54 Shift Share Shift Share http://www.rcr.uga.edu/guide/sshare1.html

55. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 55 Caveats Shift Share is: Descriptive, not diagnostic  Does not tell you WHY  Does not identify comparative advantages Minimizes the impact of business cycles

56. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 56 Q: Why is the arrival of a new business or the expansion of an existing business a welcome event in most communities? A:Jobs and Income Multiplier Effect

57. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 57 More GOOD NEWS: A new export business or business expansion usually creates more jobs and generates more additional spending and income than the jobs, spending, and wages directly attributable to the business. This is called the Multiplier Effect Multiplier Effect

58. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 58 The Multiplier Effect is comprised of three components: 1.Direct Effects: Labor, goods and services purchased by the business 2.Indirect Effects: Increase in local spending by firms that supply the business 3.Induced Effects: Increase in local spending by employees of the business Multiplier Effect Total Impact = Direct + Indirect + Induced

59. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 59 Multiplier Effect Output Multiplier Total increase in local spending that occurs to produce one dollar of output. Employment Multiplier Total increase in local employment (direct, indirect, and induced) that results from each additional employee at the firm. Income Multiplier Total increase in local income related to each dollar paid in wages, salaries, and profits to local employees and owners of the firm.

60. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 60 Multiplier Effect Source: Western Rural Development Center

61. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 61 Multiplier Effect Multiplier Effect Which has the larger multiplier? Wal-Mart Supercenter with annual sales of $81 million that employs 400 people A cheese factory that employs 10 people and has annual sales of $20 million

62. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 62 Multiplier Effect Inventory Labor Transportation Supplies Utilities Accounting services Marketing Financing Repairs Maintenance Legal Services What does Wal-Mart buy locally?

63. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 63 Multiplier Effect Raw Materials Labor Inventory Transportation Supplies Utilities Marketing Accounting services Legal Services Financing Repairs Maintenance What does a cheese factory buy locally?

64. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 64 Multiplier Effect Raw Materials Labor Inventory Transportation Supplies Utilities Marketing Accounting services Legal Services Financing Repairs Maintenance What do cheese factory suppliers buy locally?

65. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 65 Multiplier Effect Raw Materials Labor Inventory Transportation Supplies Utilities Marketing Accounting services Legal Services Financing Repairs Maintenance What do Wal-Mart suppliers buy locally?

66. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 66 Worker Flow Worker Flow Where people live and work 67,731 ÷ 73,345 = 92.35% Live in:Work in:Workers Tippecanoe, IN 67,731 White, IN495 Benton, IN256 Warren, IN64 Fountain, IN140 Montgomery, IN355 Boone, IN135 Clinton, IN724 Carroll, IN409 Elsewhere3,036 Grand Total73,345 Source: U.S. Census Bureau

67. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 67 Labor Participation Labor Participation http://www.uwex.edu/ces/cced/indicate.html

68. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 68 Bibliography Community Economic Analysis: A How to Manual, Hustedde, Shaffer, and Pulver, http://www.ncrcrd.iastate.edu/pubs/contents/186.htm Using Employment Data to Better Understand Your Local Economy, Martin Shields, http://cecd.aers.psu.edu/pubs/using_employment_ data_to_better.htm SETA Office of Social and Economic Trend Analysis, Iowa State, http://www.seta.iastate.edu/ Location Quotient Calculator, Bureau of Labor Statistics http://data.bls.gov/LOCATION_QUOTIENT/servlet/lqc.ControllerS ervlet Shift Share Calculator, University of Georgia, http://www.rcr.uga.edu/guide/sshare1.html

69. Community Development Core Competencies for Extension Professionals in the North Central Region SLIDE 69 Next Session Community Power Structure March 2, 2006 1:30 to 3 p.m. The ability to identify who the decision makers are in the community, the resources they affect, and the power structure is crucial in gaining access to a community, gaining trust and credibility, and being effective in educational programs.