Village economy: good, bad news

• By Lauren Heaton
• Published: March 20, 2014

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Click to view all the articles in this series.

EYE ON OUR ECONOMY This is the first in a series of articles examining the economic landscape of Yellow Springs.

The Village of Yellow Springs government hasn’t generally involved itself in the local economy, but over the past 10 years, the Village has gotten increasingly active in supporting the local business community. And in the spring, Village Council is expected to reassess a proposal to spend almost $1 million to build road and utility infrastructure through the business park, the Center for Business and Education.

The proposal was first submitted in the fall and immediately drew both supporters and opponents. Advocates said that the village desperately needs additional space for both new and existing businesses to grow. Detractors felt that the public money would be put at risk with such an uncertain project and might be better spent on existing economic activity. The discussion has raised deeper questions, such as how does the local economy complement the values of the community? Is the current level of business sufficient for the taxes and services villagers want? What role, if any, does Village government have to play in the business world?

This spring, the Yellow Springs News hopes to add some facts and local opinions to the conversation with a series of articles on the local economy, beginning with this installment on the existing economy and how some local economists and business practioners view the economic development question. Future stories in the series will focus on the history of our local economy, present data on the number of local businesses and jobs and examine how our profile has changed over time, consider past efforts to support and grow businesses in town and explore ideas for securing long-term economic prosperity for the future. The intent of the series is to enrich the discussion and aid the public decision-making process.

Several who spoke for this story feel that Village government does need to actively support business growth in order to avoid gentrification and stagnation of the community. Others feel that local government should not get directly involved, that business growth is already happening, and that the town’s innovative spirit and natural market forces will continue to sustain the village as a vibrant place to live and work.

“We’re kind of at a crossroads,” former YSI President Malte Von Matthiessen said. “One direction is becoming a gentrified community, which has certain implications. Or, we can re-energize the idea of a sustainable community. It’s a mixed bag now, with no consensus.”

State of the local economy
It’s not easy to assess in empirical terms how healthy the local economy is or whether or not it could use a boost. But there are some regional assessments and economic indicators that provide pieces of the story.

In the broader geographic context, over the past decade, Yellow Springs has been subject to the same negative effects of the global market as the rest of the region. The Dayton Development Coalition, an economic stimulus organization serving a 14-county region around the cities of Dayton and Springfield, analyzed the regional situation in a 2012 development strategy:

“The Dayton Region has experienced a continuous economic downturn for more than a decade, losing jobs each year during the period 2001 to 2011. In particular, employment levels in manufacturing have fallen dramatically throughout this period with job losses accounting for 32% of the manufacturing workforce.” More than 50,000 jobs have been lost in the region, the report states.

Similarly in Yellow Springs, the business landscape has changed since traditional manufacturing (Creative Memories, Vernay Labs) has shifted away from the region, resulting in the loss of about 300 jobs in the past 12 years. Between 2001 and 2011, the number of jobs in the village dropped from 1,945 to 1,649, according to data from the U.S. Census. The spectrum of types of jobs remained relatively stable throughout the period, with education comprising roughly 35 percent of jobs, and health care, retail and accommodations/food service covering about 10 percent each. Manufacturing took an industrywide hit, falling from 27 percent of local jobs in 2003 to 15 percent in 2011.

In addition to job statistics, the DDC uses some “distress indicators” to help determine the economic health of a community. Some of those figures for Yellow Springs indicate the village is doing well relative to regional and national figures. The median annual income for Yellow Springs, for example, is higher at $56,000 than the national average of $51,000 and $46,000 in Ohio. Villagers are also relatively highly educated. More than 57 percent of local residents have a bachelor’s degree or higher, versus 24 percent in Ohio and 28 percent nationally.
Other indicators suggest negative economic trends in the village. While poverty in the village between 1990 and 2000 hovered around 8 percent, lower than steady state and national averages of between 10 percent and 14 percent, the local poverty rate has jumped since then to a high of 15 percent, according to the Cost of Living report. In addition, the rate of job loss in the village was 18 percent, notably higher than the 6 percent loss of jobs (50,000 jobs) in the Dayton region during the same period, a trend the DDC said has been “difficult for the Dayton Region.”

But there is also quantifiable future growth potential in Yellow Springs. While the Dayton region is looking at the potential job growth in particular industries (aerospace systems, advanced materials, information technology, and human sciences), according to a 2014 industry report from the DDC, Yellow Springs is expected to see a net growth of 126 jobs between now and 2019.

According to the report, which uses the federal jobs database as well as national trends and very localized historical trends to predict job growth, the highest growth will likely be concentrated in the areas of education, training and library science (44 new jobs), food service and service related occupations (37 new jobs), and healthcare/social assistance (19 new jobs). The report also shows that manufacturing will continue to decline at a slow but steady pace, and that information jobs will fall even further by about 34 percent. Partially supporting those claims is historical data showing that between 2005 and 2014 accommodations and food service grew 28 percent and healthcare grew 27 percent, while information jobs fell 77 percent. Most other areas such as retail, education, construction and professional and technical services, are expected to grow slightly or remain flat.

Local economic strengths
Despite the overall local jobs loss, most people interviewed for this story believe the value of the existing mix of businesses and the innovative local culture holds the potential for a strong economic future. (How we as a community decide to expedite growth is another matter.)

In terms of economic strengths, according to Von Matthiessen, the village can claim the advantage of an innovative, experimental environment supported by three institutions of higher education, Antioch University, AU Midwest and Antioch College, the last of which has begun a business partnership with green feed producer EnviroFlight. A highly educated work force is also a result of the co-location of so many schools in one place — a factor that influenced EnviroFlight’s founder Glen Courtright to start his business here. The village also maintains a strong set of private sector leaders, both active and retired, who could serve as a consulting or investment resource to existing and start-up businesses, according to Von Matthiessen.
The downtown also has a lot to offer, according to Ellen Hoover, co-owner of MillWorks business/warehouse property. With close to 77 retail businesses on three main streets, the central business district serves not only a strong tourist economy, but also local food and shopping needs.

The village is also bolstered by what Hoover sees as a very responsive local government eager to answer zoning questions and meet the needs of local or new businesses. The Village also works well with the Yellow Springs Chamber of Commerce (whose director Karen Wintrow is also a Village Council member) at expediting communication, something that businesses rely on for efficient marketplace decision making.
Roadway infrastructure has been greatly improved with a major street paving increase over the past five years, as well as reduced power outages due to better tree trimming, Hoover said of two problems past MillWorks clients have talked about. And according to Thor Sage, director of the regional educational computing consortium MVECA, the village is also strategically outfitted to deliver high capacity technological services with the existing infrastructure.

The good news, according to local economists Dave Wishart and Frank Goetzke, is that with the combined strengths the village offers, Yellow Springs is naturally strong enough to survive even without a concerted economic game plan. The village has remained true to its very early 19th century Owenite roots set in egalitarian industriousness, Wishart said. The Antioch College culture that followed furthered the innovative and social justice mores that still make the environment ripe for business innovators committed to the community, he said.
“My impression of Yellow Springs is that it’s always been a place with a great deal of emphasis on creativity, alternative approaches to problems, and creation and transmission of knowledge,” Wishart said. “Those are the places in the world whose cultures have always done best — it all leads back to innovation, technology, creativity and human capital.”

In fact, according to Goetzke, government involvement in economic systems is usually ineffective at best. Government should stick to what it’s good at: public good projects such as streets, police and schools, as well as regulating financial markets and protecting the environment. The best economic stimulus tool is education, he said.

“[Governments] have a fantasy that they have more control over it, but by doing things they create more damage than they can imagine,” he said. “I’m totally convinced the best economic stimulus is to have a good education system. But the payoff is not in the short term.”

Potential going forward
While some advocate for patiently allowing the village’s natural strengths to carry it into the future, others worry about recent job losses and believe that the village needs to increase its chances by investing in vital economic support systems. Yellow Springs may not be accustomed to economic planning because, in the opinion of local resident Evan Scott, a former DDC planner, Antioch College was so effective at growing the major industries that have sustained the village for the past half century. However, the village has some shortcomings and things it could do to increase opportunities for growth.

One is an economic plan for the village. Ellen Hoover was part of a commission appointed by Village Council to propose an economic sustainability plan, which it did in 2011 without follow-up by Council. Specifically, Hoover believes the village needs to evaluate the plan and discuss if incentives are available to retain/attract businesses and detail what kind and how much. The Village should also decide what kind of resources are available to support further growth, including an economic fund, potential property (another resource with limited availability, Hoover said), hiring another development officer, or other business support systems.

Von Matthiessen agreed that an economic plan would establish clear goals to focus the community’s energy and make things happen.

“We’ve been wandering down the path without a clear, strategic direction, and one of the missing ingredients has been an economic strategy with goals and milestones,” he said.

Given the jobs analysis by the DDC, Yellow Springs would do well to let go of the dream that manufacturing is coming back. The trend is one Von Matthiessen sees as well, which is why he believes the village should focus on the innovative, technological, research side of business. Even for those who choose to locate their production operations in other locations, Yellow Springs could still provide the ideal environment for the research and development side of any business, he said.

The idea dovetails directly into Scott’s point that the village’s most promising long-term economic solution is to re-create the business incubator at the heart of the sustainable community vision of Arthur Morgan, president of Antioch College from 1920 to 1936. Regarding the traditional economic development efforts that involve marketing and competitive tax incentive programs to draw businesses to the area, Scott believes those strategies are more effective when executed on a regional level. But on the local level, Yellow Springs in the long term will benefit most by focusing, inclusively, on not one, but all the local solutions that have been suggested. For example the Village should upgrade the Village water system (short-term gains) and complete the CBE (medium-term gains) and partner with the college and university on innovation (long-term gains).

“Is it public money funding private investment? No, it’s public money funding future public revenue,” Scott said. “We have to shift the conversation from ‘either/or’ to ‘both/and.’ Like every community in America, we have a list of 100 needs and resources to fund three. But let’s get both a sidewalk and a place for companies to land. The question is not which, but which order.”

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