Enterprising States

Creating Jobs, Economic Development, and Prosperity in Challenging Times

Executive Summary

The message of Enterprising States is that the 50 “little Republics” matter. State policies matter. Governors, state legislators, and local officials matter. Although the Federal government has been driving stabilization policy during the recent recession, it is the states [and territories] that will lead a crucial new growth strategy in the next decade. The nation needs an economic revival sufficiently robust to create 20 million jobs over the next decade—restoring the 7 million jobs lost to the current recession, and creating the 13 million new jobs that our growing nation will need in the next 10 years. And while the Federal government will affect the situation on the ground in broad strokes and from a distance, Governors and state and local government will drive the types of new, experimental, flexible jobgrowth strategies that can match the speed of the global economy and achieve this growth imperative.

Fiscal challenges can force important policy choices about taxation and spending priorities, and states must balance those decisions against the need to retain and attract private enterprise. In fact, many states have shown that fiscal prudence and bipartisan pragmatism are more likely to be achieved outside of Washington. The findings of Enterprising States are likely to surprise and prove powerful examples for the next wave of state-level policy innovation.

Consider: the State of North Dakota, perhaps an afterthought to some, was a national leader in job growth over the last decade. Montana, meanwhile, leads in many measures of entrepreneurship, Tennessee in several measures of taxes and regulation, and Minnesota on workforce development and training. Some states, like Texas and Utah, are strong across the board in both economic policies—and economic results. And despite a Midwestern manufacturing meltdown, a State like Indiana remained afloat because of sensible tax, budget, and regulatory policies, proving it can be done.

“America is a vast country made up of hundreds of diverse economies,” writes study co-author Joel Kotkin. Theflexibility to match local strengths with global needs will be paramount. It is local knowledge and local energy—among local officials and individual businesspeople and entrepreneurs—that will make the difference. Washington can focus on a few overriding national priorities, but most of the new ideas, new companies, and new jobs will come from local initiative.

As Kotkin writes, “This enterprising spirit reflects a broad, long-term American trend. U.S. employment has been shifting not to mega corporations but to individuals and smaller units; between 1980 and 2000, the number of self-employed individuals expanded tenfold to comprise 16 percent of the workforce.”

In the coming decades, the U.S. will enjoy a “demographic dividend” of more immigration and higher birthrates compared to most developed nations. This dividend of human capital could be a chief U.S. economic advantage in
a global economy. But only if we match this demographic dividend with a “jobs dividend.”