City officials worry over high unemployment, skills gap, demand for services - report

City officials worry over high unemployment, skills gap, demand for services – report

A national survey of city officials released today 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.

The NLC report surveyed top city officials nationwide about what, if any, economic recovery is currently happening in their areas. While 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.

53% of respondents said that the skills gap is causing a problem for their local economy. 88% of those surveyed said 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.

CivSource has reported on a number of these factors including the 159% increase in college tuition costs, along with the national battle being waged on broadband access. Human services demand is also skyrocketing. 56% of city officials in the survey 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. Our recent coverage shows that a growing number of Americans are paying 50% of their income or more just on rent or mortgage payments, leaving little for basic needs.

“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,” said NLC President Marie Lopez Rogers, Mayor, Avondale, AZ.

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.

Infrastructure spending

While cities struggle with finding ways to better align labor and jobs, there are some positive signs. City officials in the survey note that they are planning to making some capital expenditures on public works and infrastructure projects. These projects could provide short term support for jobs and improve the state of the nations crumbling infrastructure. However, 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.

So far, opposition to changes in the municipal bond tax structure has staved off any real movement on the issue. Federal support for leaving the exemption open has also come from the House of Representatives. Although, continued uncertainty over budget negotiations in Congress could have a chilling effect on planning and bond issuance in municipalities.

“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,” said NLC First Vice President Chris Coleman, mayor, St. Paul, MN.

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