SSTI Digest

A recent Economic Commentary from the Federal Reserve Bank of Cleveland reviews the early research surrounding the effects of the pandemic on education and examines three specific areas of concern: the spread of the virus through in-person school settings; the impact of K-12 school closures on labor force participation; and, the effects of virtual schooling on student outcomes. The commentary posits that the evidence thus far does not find much evidence supporting the claim that school closures have reduced labor force participation, but also notes that the research on those outcomes studied the impacts of the initial school closures in spring 2020 and that fall 2020 and spring 2021 may differ. In fact, recent research from the U.S. Census Bureau runs counter to these findings and instead says many moms have left the workforce, with nearly 705,000 giving up on work outside the home entirely.  The commentary found that the spread of the virus at K-12 schools has been low, although it may be higher at colleges. And lastly, the fed commentary says that there is evidence that the pandemic is negatively affecting students’ academic performance.

In January, the Office of Management and Budget (OMB) posted a request for public comment on the recommendations it has received from the Metropolitan and Micropolitan Statistical Area Standards Review Committee for changes to metropolitan and micropolitan statistical area standards. The 123 comments that have been recorded to date reflect a level of concern regarding changing the population threshold for urban areas and the impact on future funding that would have for these areas. Currently, a metropolitan statistical area (MSA) must contain a Census Bureau-delineated urban area with a population of 50,000 or more, while a micropolitan statistical area must contain a Census Bureau-delineated urban area with a population of 10,000 to 49,999. The review committee has recommended that the population level to qualify as a metropolitan statistical area should be increased from 50,000 to 100,000. OMB notes that it “establishes and maintains these areas solely for statistical purposes. In reviewing and revising these areas, OMB does not take into account or attempt to anticipate any public or private sector nonstatistical uses that may be made of the…

The Appalachian Regional Commission (ARC) is seeking public input to help identify critical opportunities and challenges facing Appalachia’s economic future through a series of virtual sessions taking place in April. ARC will use the insights gathered from these public sessions in the development of a strategic plan to inform investment priorities for fiscal years 2022-2026. Sessions are free, but pre-registration is required. ARC is also collecting input via a public survey available at arc.gov/EnvisionAppalachia. While a new strategic plan is developed every five years, the onset of COVID-19 delayed input plans in 2020 and the current plan was extended. More information about the effort is available here.

To bolster its already thriving technology sector, the city of Austin, Texas, has partnered with Opportunity Hub (OHUB) and others from industry and academia to bring a new Equity District to the city. Similar to the innovation district model, this new Equity District will be “anchored in equitable place-making and mobility for the fourth industrial revolution” by providing coworking space, entrepreneurship support programs, a platform for fostering networking and mentorship, re-skilling training and certificates, and an investment structure to increase early-stage investment in Black founders. The Equity District plans to deliver on its commitment of increasing economic opportunity for Black, Indigenous, and people of color not just by providing entrepreneurship training and support, but also by connecting participants to jobs. While OHUB’s historical placement rate is already 90 percent, the Austin Equity District will also ensure that each founding partner hires at least 10 people for full-time positions from the program’s talent placement arm. Click here for the official announcement.

Last week, members of SSTI’s Innovation Advocacy Council headed online for this year’s Hill Days in support of increases to FY 2022 appropriations for key innovation programs. Congresswoman Haley Stevens, vice-chair of the House Committee on Science, Space and Technology, kicked off the meetings by speaking with the IAC members. Stevens focused the group on the importance of science and innovation in helping to address the country’s immediate crises, as well as improving our long-term competitiveness. In all, IAC members held more than two dozen meetings with congressional offices and received largely positive responses to requests to increase funding for the Economic Development Administration’s Build to Scale program and the Small Business Administration’s Regional Innovation Clusters and Federal and State Technology Partnership programs. To add your support to SSTI’s outreach efforts, contact Jason Rittenberg (rittenberg@ssti.org).

The American Rescue Plan Act, a $1.9 trillion spending package to address the ongoing health and economic impacts of COVID-19, was signed into law today. The legislation includes several initiatives that could strengthen regional innovation economies. Most notable among these is the $10 billion State Small Business Credit Initiative (SSBCI), $3 billion for the Economic Development Administration (EDA), and $350 billion for state and local government relief. SSBCI Reauthorization The legislation creates a $10 billion new authorization for SSBCI, but there are several significant differences from the program that was first created and funded in 2010. Of the total, $6.5 billion would be distributed to the states, territories and D.C. according to job loss and unemployment, as would another $500 million for tribal governments (which were excluded from the original program). An allocation of $1.5 billion would go to the states specifically to support socially- and economically- disadvantaged businesses, with another $1 billion available as incentive payments to states that prove particularly effective in supporting these companies. Finally, the program provides…

States often estimate their participation in the Small Business Innovation Research (SBIR) program by counting the number of awards made, total of award value, or (when available) the success rate of applications in their state. In this edition of SSTI Useful Stats, we attempt to go beyond these measures to estimate states’ untapped potential for capturing future SBIR awards. This creates a baseline proxy for tailoring and assessing a state’s outreach and support activities.

Last month, Gov. Laura Kelly (D), alongside former state governors Mike Hayden (R) and John Carlin (D), and the Lt. Gov. and Secretary of Commerce David Toland, announced “Framework for Growth”, the state’s first economic development plan in over 30 years. The plan, which was a year in the making, is a collaborative effort that involves input from over 2,000 Kansans, the staff of the Department of Commerce, and two former governors.

State revenues experienced their steepest plunge in 25 years in the final quarter of the fiscal year ending June 30, 2020, according to a recent analysis by Pew. It also notes that while some of those revenues were expected to be recovered, nearly half of all states were still projecting revenue declines this fiscal year. The federal government’s decision to delay the April 15 tax deadline pushed tax payments into the first quarter of the current fiscal year, further straining many state budgets for fiscal year 2020. Gains made before the pandemic coupled with the federal stimulus payments helped states recover somewhat, but Pew found that at least 19 states were forced to pull back on spending and at least 15 tapped into their rainy day funds to balance the fiscal 2020 budgets. Other analyses of the states’ budget situations were also explored in a recent New York Times story that found that many states took in as much revenue in 2020 as they did in 2019. It, too, notes the federal stimulus payments allowed people to keep spending, sometimes pushing their purchasing power above what they experienced when working, which in turn fed tax revenue from retail sales, as well…

In an event organized by the Hutchins Center on fiscal and Monetary Policy at Brookings, academics from some of the nation’s leading universities sought to answer questions centered around Opportunity Zones (OZs), including what is the goal of OZs, are they helping, and how would we know? The 2017 Tax Cuts and Jobs Act created more than 8,700 Opportunity Zones (OZs) across the United States. The program was intended to spur economic development in distressed communities and offered favorable capital gains tax treatment to investments in such locations. The program has already stimulated a flurry of academic research even though final regulations for designating OZs were not published until late 2019. these questions. On the whole, the conference produced mixed results. Researchers reported it is unclear whether OZ designations were influenced by political favoritism, whether there are apparent positive labor market effects, the role of gentrification, and what the effects on property values are. Add to this the program's recency and the ongoing economic impact of COVID-19, and the picture remains unclear. As new data becomes available and the program ages, researchers…

The U.S. Senate Committee on Commerce, Science and Transportation announced a new structure for its subcommittees in the 117th Congress, bringing the total number from six to seven. The subcommittees are: Aviation Safety, Operations, and Innovation – Chair Kyrsten Sinema (D-AZ) and Ranking Member Ted Cruz (R-TX); Communications, Media, and Broadband – Chair Ben Ray Luján (D-NM) and Ranking Member John Thune (R-SD); Surface Transportation, Maritime, Freight, and Ports – Chair Gary Peters (D-MI) and Ranking Member Deb Fischer (R-NE); Oceans, Fisheries, Climate Change, and Manufacturing – Chair Tammy Baldwin (D-WI) and Ranking Member Dan Sullivan (R-AK); Consumer Protection, Product Safety, and Data Security – Chair Richard Blumenthal (D-CT) and Ranking Member Marsha Blackburn (R-TN); Space and Science – Chair John Hickenlooper (D-CO) and Ranking Member Cynthia Lummis (R-WY); and, Tourism, Trade, and Export Promotion – Chair Jacky Rosen (D-NV) and Ranking Member Rick Scott (R-FL). The committee has not yet posted details on the jurisdiction of each subcommittee, but the titles are instructive. Space and Science is likely to be responsible for Stevenson-…

The Ewing Marion Kauffman Foundation and Start Us Up coalition announced an update to the America’s New Business Plan platform to advance entrepreneurship. The update places a strong emphasis on the importance of addressing the historical inequities of the American economy, as well as the urgent concerns of the coronavirus pandemic. The lead-in to the specific policy proposals also acknowledges the importance of providing sufficient support to new companies, not just all small businesses. The four pillars of the plan are access to opportunity, funding, knowledge, and support, and the policy recommendations are relevant to actions at the federal, state and local levels of government. SSTI, which is a member of the Start Us Up coalition, is particularly active in support of the plan’s recommendations to reauthorize a program like the State Small Business Credit Initiative, to support the Build to Scale program at EDA, and to create a visa category for immigrant entrepreneurs. Read the updated America’s New Business Plan and learn more about the Start Us Up coalition.