EDITORIAL: New economic incentives strategy is product of collaborative effort

When the city of Indianapolis announced last month that it’s revamping its economic development strategy to stimulate higher wages and other poverty-fighting tools, community leaders greeted the news with enthusiasm.

“In some ways, this is exactly the recipe we have been fighting for the whole time,” said Tedd Grain, executive director of the Indianapolis office of the neighborhood-development group Local Initiatives Support Corp. “This is really just amazing.”

Like Grain, we applaud the new strategy, which is just the latest step in the city’s broader fight to stimulate economic mobility.

The eye-opener for city leaders came in the form of Harvard University research published in 2014 showing that less than 5% of people who grow up poor here end up in the top 20% income bracket, a statistic that suggested economic mobility here was among the worst in the nation.

Then came a Brookings Institute study in 2018 of economic development incentives in Indianapolis and three similar-size cities. Among its findings was that most incentives in Indianapolis went to neighborhoods with poverty rates that were lower than the county as a whole.

Unlike in some cities, the government, business and not-for-profit sectors here have worked together to both expose and find solutions to the problem. The city’s recent policy announcement, which goes into effect Jan. 1, is the result of work by government officials, the Indy Chamber, the Central Indiana Community Foundation and others.

Between now and the first of the year, architects of the strategy will refine it, but in broad strokes it will require firms that receive incentives such as property tax abatements to attack barriers to economic mobility. They’ll be required to pay workers at least $18 an hour and/or offer health care benefits, better access to transportation, child care or social services. Officials will look favorably on companies that reduce racial, income and hiring disparities, or that locate in a distressed neighborhood.

We’re behind the effort, but can’t overemphasize the need for follow-up. As the Brookings study noted, monitoring incentives’ effectiveness is universally embraced, but few cities put enough resources into doing it.

Unless the city effectively measures outcomes, we won’t know if the program is working or how to improve it. And the task of monitoring will surely become more complicated as the city moves away from incentives doled out based mainly on numbers of jobs created.

Considering the number of organizations here that are focusing on the problem, we’re hopeful the monitoring component won’t be shortchanged. The city, Indy Chamber, CICF, United Way and others have shown that, when they work together, they can come up with promising initiatives.

As we’ve learned in IBJ reporter Hayleigh Colombo’s series on the broad effects of poverty in Indianapolis, “One City, Worlds Apart,” the city’s economic future is limited by a large and growing underclass.

Initiatives like the city’s new incentives strategy raise the importance of confronting the city’s economic mobility challenges. With focus follow-up and the combined efforts of many, we can move the needle on a persistent but not insurmountable problem.•

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