Tepid Economic Progress Seen as Cities Still Struggle with Jobs, Wages

Though U.S. cities showed modest improvements in their local economies last year, a number of barriers continue to prevent many from making a full rebound.

Graph showing what local officials are saying about property tax indicators in their cities. Credit: NLC

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Though U.S. cities showed modest improvements in their local economies last year, a number of barriers continue to prevent many from making a full rebound, according to a National League of Cities report released today.

In an annual survey of chief elected officials across the country, the NLC found that commercial activity is slowly picking up in the 310 cities that responded. Much of this can be seen in housing and retail, which function as pretty reliable indicators of a city’s tax base. However, incomes have largely remained stagnant and unemployment levels remain high, making it the number-one problem for many cities.

“If America’s cities are struggling economically, we also know that America is struggling economically,” Clarence Anthony, NLC’s executive director, said in a conference call to discuss the report.

Two major reasons why cities still struggle with jobs and wages is what’s known as the “skills gap” — that notion that employees’ skills are not keeping up with employer demand. More than half of the survey respondents said that this is an issue for residents in their cities.

St. Paul, Minn. Mayor Chris Coleman, also speaking on the conference call, said that 15 percent of job vacancies in his city are hard to fill because those who need the work simply lack the skills to perform whatever jobs are available. To help keep workers apace of the demands of the job market, Coleman called for federal reauthorization of the Workforce Investment Act, a 1998 law that three Congressional Democrats have proposed to update this year.

Returning to the positive news for a moment: More than half of the officials polled this year reported new housing starts in their cities, while only a quarter could say the same in 2011, the survey’s first year. Property values — especially for residential properties — have increased, and while more officials said they are dealing with residential vacancies, commercial vacancies are down by about 5 percent compared to last year.

One notable sign of economic recovery is that far more officials said they anticipate new investments in infrastructure and capital projects: 60 percent this year as opposed to 45 percent last year and a little more than one-third in 2011.

The prospect that the feds might put a limit on tax-exemptions for municipal bonds — a move currently under consideration in Washington — was overwhelming viewed as a threat, with 60 percent of respondents saying it would limit the number of projects their cities could undertake.

Despite optimism about real estate and infrastructure investment, many cities struggle to keep up with demand for what are known as “survival services,” or basic services such as food, heat and clothing.

“The stock market certainly doesn’t show what we are seeing on the streets of our communities,” said Marie Lopez Rogers, mayor of Avondale, Ariz., reinforcing the NLC’s emphasis that whatever progress made so far has been gradual and tenuous.

Or as Coleman put it, “While this is a recovery, it is a tepid recovery at best.”

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Tags: affordable housingjobseconomic developmentreal estatemayors

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