Successful Cities Need Successful Economies

Address by Thomas J. Donohue
President & CEO, U.S. Chamber of Commerce
To the U.S. Conference of Mayors

 Madison, WI
June 15, 2002

Introduction

Thank you very much for inviting me, and thanks to our breakfast sponsor, Philip Morris. One of our top lobbyists recently left the Chamber to take a job at Philip Morris, so we're thinking about raising their membership dues as compensation.

On a more serious note, I'm very pleased to be here. Opportunities that bring business leaders and mayors together are not only important, but also necessary for building vibrant communities and strong economies.

We need to keep the dialogue going, sharing with each other our concerns, our goals, and expectations.

That's why the U.S. Conference of Mayors and its Business Council are such tremendous assets—and I'm confident they will continue to be under Mayor Menino's leadership.

I was in New York earlier this week for the Chamber's board meeting, at which we honored a fellow named Michael Bloomberg.

Mike was a member of the Chamber's board until just a few months ago, when he decided to make a slight adjustment in his career path.

Dozens of CEOs were there, and many of our discussions centered on the same topics you are talking about here.

How real is our economic recovery? How do we reach and sustain the levels of growth necessary to generate the revenues you and other levels of government need to improve our citizens' quality of life—increase their access to health care, housing and transportation, improve schools, fight crime, and expand economic opportunity?

How do we protect our citizens and the critical infrastructure from terrorism, while still upholding the freedom and mobility that define us as Americans?

These are the fundamental issues of this unique time in our history—and the people of our country are looking to both of us—the CEOs of our companies and to you, the CEOs of our cities—to lead America in the right direction.

We are bound together by these responsibilities, and we must work together to meet them.

This morning, I'd like to suggest some things you can do to build and expand the economic base of your cities so that you can build and expand services, opportunities, and security for your residents.

Successful Cities Need Successful Economies

Some say being mayor of a large- to medium-size city is the toughest public sector job around, and I'm certainly not going to argue with them.

You're on the front lines. You have to deliver. You have to live in the real world of what works and what doesn't—politics and ideologies aside.

So what does work? I'm not an expert in municipal governance. But I do know a little something about money, budgets, and business.

I start with this premise—and I believe that mayors, no matter which side of the philosophical spectrum they come from, understand it better than anyone—and that is, successful cities need successful economies. And successful economies are built on a strong and vibrant private sector.

Those of you who have governed in both good economic times and bad know that good business alone doesn't guarantee success, but it sure beats the alternative, doesn't it?

Right now, economic times are not the best for America's cities. Mayor Bloomberg told the Chamber board that almost every major city is facing a serious budget shortfall this year.

But when revenues are pouring into your coffers, when the residents of your communities are empowered with the security and hope of good paychecks, when they are receiving business-provided services like health care, the opportunities to keep your promises as elected officials expand dramatically.

In so many ways, business is and can be the engine of urban progress.

It creates jobs and opportunities for the welfare moms and high school dropouts.

It builds the housing units that provide a roof for the most disadvantaged. It voluntarily provides health insurance for those who couldn't otherwise afford it.

And it helps secure the retirements of millions of working people by sponsoring and contributing to pension, 401(K), profit-sharing, and stock option plans.

So the fundamental question I'd suggest you consider and consider every single day you're in office is—how do I make my economy more successful so that I can make my city more successful?

What can I do to make my city more attractive to business in order to build a more prosperous community and provide for those who need a helping hand?

On one level, answering these questions are more complex than ever before—and the reasons rest in that most infamous word and concept of our times—globalization.

Globalization means different things to different people. What it means to mayors is that you are no longer simply competing with the city down the highway for jobs and business—you are competing with cities halfway around the world.

In today's global economy, the movement of capital, companies, technologies, information, and people is widespread. Businesses have more choices than ever on where to direct their resources and assets—they can go anywhere.

Now we can like this reality, or we can dislike it.

But we can't really deny it. The genie of globalization is out of the bottle—and it's not going back in.

And so in this global environment, the question you should be addressing is the same one I hear all over the world during my visits with leaders of developed and developing countries alike: "How do we attract businesses, more capital, and more jobs to our country, or to our community?"

The answers are the same everywhere and for everyone—capital and business go where they are welcome, where they are safe, and where they have not a guarantee, but a reasonable prospect of making a profit over time.

Checklist for Prosperity

So as mayors, how do you monitor and make sure that your cities are inviting places for business?

How do you make investments welcome, safe, and productive?

I'd like to offer you the following checklist. You could call it a "checklist for prosperity"—for if you tend to these matters and work hard to improve them, you will build a successful economy and therefore a successful city.

First, businesses are on the lookout for skilled, dependable workers, and will go wherever they must to find them.

Don't let the unemployment figures fool you—as the economy rebounds, businesses will be strapped to find enough workers—and the problem will only get worse in the coming years as the baby boomers begin to retire.

We need to devote resources to developing the workforce.

Immigrants are a valuable source of labor, which is why the Chamber is pushing for an immigration policy that will welcome law-abiding immigrants eager to fill critical jobs into our country while legitimizing—in some fashion—those already contributing to our economy.

Welfare recipients, reformed prisoners, and the disabled are all valuable, yet largely untapped, human resources. Are we doing all that we can to bring them into the fold?

At the U.S. Chamber, one of our affiliates, the Center for Workforce Preparation, is working with many local chambers of commerce to provide the resources, models, and best practices companies need to identify, recruit, and retain employees.

I invite you to participate in the programs of the Center for Workforce Preparation, and we can get you more information if you can't get it from your local chamber.

We all know that the history of government-backed job training programs in this country is a history of good intentions gone bad.

The Chamber stands ready to work with the mayors on reforms that give you the flexibility and resources you need to train the workers of the future.

Of course, the most important part of job training is the basic education our children receive through the public schools.

Schools must be adequately funded, subjected to clearly defined standards, and held accountable for failure to achieve those standards—objectives laid out in last year's federal education bill that the Chamber strongly supported.

Second, cities must work to improve their transportation infrastructure and the flow of goods, services, and people.

It's no secret that, nationally, investment has failed to keep pace with increased use.

The result is an outdated and outmoded network of roads, transit systems, airports, highways, bridges, and seaports that is draining the economy—creating more gridlock and pollution while hurting productivity.

The Chamber is fighting hard to make sure Congress lives up to its obligation to fully fund a modern, safe transportation system that represents the breadth and diversity of our nation—that links cities to the global marketplace and offers residents and businesses a full range of transportation options.

Those funding levels dipped this year because of 9/11 and the economic downturn, but at the urging of the Chamber, Congress is in the process of winning back billions of additional dollars for transportation.

I know there are divisions throughout America as to how these funds should be spent, and that decisions are often based on who has the more powerful Congressional delegation rather than who has the greatest need.

But we can't even have that debate a long as we continue to allow already collected transportation user fees to be diverted to non-transportation uses. Let's work together to enlarge the whole pie. Then we can have a more meaningful debate about how we divide the pie.

Third, it's important that we give our workers greater access to health care, which will come by keeping costs in check and resisting the temptation to add mandated benefits.

Many of the nearly 40 million Americans without health insurance are working people. If we can find a way to make it affordable for their employers to cover them, we can make a big dent in the number of uninsured.

I know it's tempting for elected officials at all levels to support new mandates on employer-sponsored health care and participate in the demonizing of certain health care providers.

Just understand that this will not create coverage for a single additional family, and it may cost other families their coverage due to rising costs.

A more productive approach is to give companies new incentives for offering or expanding coverage, such as allowing small businesses to band together for the purpose of purchasing insurance, and giving individuals and the self-employed full tax deductibility for buying coverage for themselves.

The bottom line is, if healthcare costs continue to go through the roof, businesses will move to where coverage is less expensive, or they will cut back and even terminate coverage for their employees. Either way, it's the residents of your cities that lose out.

Fourth, businesses will go where they are least exposed to frivolous lawsuits.

A new lawsuit is filed in America every two seconds—more than 15 million cases a year. Needless to say, many of these suits are without merit.

Now let's get one thing straight. Business does not object to legitimate grievances or reasonable compensation for individuals who have truly been harmed.

But too often, trial lawyers file claims on behalf of those who have not been wronged or harmed—and the lawyers end up taking home millions while the their clients are awarded coupons or what amounts to little more than pocket change.

The trial bar has gained excessive influence in many regions and cities throughout this country—and in some cases, it has teamed up with state and local governments to bring huge class action lawsuits against legitimate industries.

Let me be as clear and polite as someone from New York City can be. If the business community sees a city consciously pursuing a strategy of government funding of abusive class action lawsuits, we simply won't go there. We'll go somewhere else.

I know that most aspects of legal reform fall outside your purview, but you can set an important tone and show support for the principle that everyone should have access to our justice system—but that no one should be allowed to exploit it or distort it.

Fifth, city governments must take a hard look at taxes and regulations. Does your city always look to business first whenever there is a budget shortfall?

Are taxes—disguised as fees—piled onto business because, politically, it's easier to hit up companies than residents? How long does it take for a start-up business to get a license to operate? How many pages of paperwork have to be filled out?

How many companies closed shop or moved out of your city last year? Do you even know?

If you were an entrepreneur, would you honestly be willing to take the risk of starting a business in your own city?

I'm going to say something some of you may not want to hear, but I believe a spirit of candor is important.

If you're thinking about making your city a pioneer when it comes to living wage laws and other requirements please think again. Some of these ideas are very well intentioned, but have a negative impact on business and job development.

Keep your eye on the cumulative effect of all these great-sounding ideas that people come up with to engineer a better society through government regulation.

Sixth, how safe is your city from crime and terrorism? I know homeland security is near the top of your priority list, and you might be surprised to learn that the same is for business.

We can't ignore the fact that the attack against the World Trade Center was an attack against free enterprise and everything else business stands for.

Companies have completely retooled their internal security systems to better protect against terrorist acts. They expect a similar commitment from the public sector.

They are looking closely at cities' police and security forces. They want to be assured that the critical infrastructure—the transportation system, the water and food supplies, the computer networks—is well protected—but not to the point where commerce is unreasonably hindered.

People and products must be able to move about freely. Our economy…our way of life depends on it.

And finally, let me say a word about brownfields. There isn't a sector of society more interested in the cleanup and renewal of the 500,000 abandoned, potentially contaminated brownfield sites than business.

Developers are chomping at the bit to redevelop these areas, but not at the risk of facing statutory and regulatory obstacles, uncertainty about potential contamination, and questions regarding long-term liability.

The Chamber has worked hard to remove these barriers. For three straight years, we've hosted a national brownfields summit, which last year attracted EPA Administrator Christie Todd Whitman and HUD Secretary Mel Martinez, dozens of government and corporate leaders, and maybe even some of you.

Those summits helped build support for the recently enacted federal law that increases federal cleanup funds and makes it easier to transfer ownership of an abandoned industrial site without the potential for liability.

But our work is not done. The Chamber will continue to be a strong voice for brownfields cleanup and urban renewal as long as these areas exist, and we look forward to working with you to achieve these goals.

Conclusion

Ladies and gentlemen, globalization is reshaping the world. For business, it means more competition, but also more opportunities. The same is for cities.

The stakes are higher, but the rules have not changed. America's cities have, are, and will continue to be winners if they can create a winning formula for business.

So I ask you to stay engaged with your local business leaders, understand their needs and express yours, and remember the seven items on my checklist—and add ones of your own that you believe will make your city a winner in the fierce global competition for jobs and business.

I'm looking forward to some questions and discussion, and I hope this is the first of many opportunities we have for a serious conversation about the future of America's cities and the American economy.

Despite all the problems we face, I do believe a great urban renaissance is underway in our country. Many of the leaders here today are making it happen, and I congratulate you for your achievements.

And I assure you the Chamber of Commerce of the United States stands ready to work with you to keep the fires of this renaissance burning brightly.

This has been a wonderful opportunity. Thank you very much.