States are best at ensuring employment—they can efficiently tailor jobs to local needs and opportunity

If targeting distressed places with job opportunities is desirable, why focus on state governments? Why shouldn’t the federal government be the main focus for bringing about greater targeting of distressed places? To clarify: this report’s focus on state targeting of distressed places is not meant to disparage possible federal targeting. But state-level targeting has some substantive advantages: state governments are more likely to be adaptable to the varied needs of distressed places. State experimentation also may provide better evidence on “what works.” Politically, because targeting is difficult at all levels of government, pursuing it wherever the political opportunity occurs, at either the federal or state level, seems a pragmatic strategy. The structure of political representation at the state level potentially makes targeting more feasible. Distressed places with low employment rates do not all need the same policy intervention. At the local labor-market level, as outlined above, various public services to enhance business inputs are the most cost-effective way to create jobs. But not all local labor markets need exactly the same services. Some places may need a road or transit infrastructure project; other areas may not. Manufacturing extension services are obviously far more relevant for manufacturing-intensive areas. Local labor markets with different industry mixes, and different preexisting skills of local workers, will need different levels of spending and different design of customized training programs. Rural areas have different needs from urban areas: for example, many distressed rural areas may need more assistance in improving governmental capacity to apply for and conduct effective economic development programs. At the neighborhood level, services can help residents with jobs, but which services are most needed will depend upon what the neighborhood already has and what the key barriers are to accessing the local labor market’s jobs. Some neighborhoods may need better mass transit links, whereas in other neighborhoods, services may be needed to help residents get reliable used cars. Available jobs may require a lot of training for neighborhood residents, or they may simply require better information on job availability. Child-care availability will also vary across neighborhoods (Davis, Lee, and Sojourner 2019). Which level of government, federal or state, is more likely to offer the needed flexibility to local labor markets and neighborhoods to respond to low employment rates with diverse solutions? Probably state governments, as they are closer to the people and more attuned to the particularities of local needs. State action is also desirable for evaluation purposes. Although we know something about what policies best increase job availability, we would like to increase our knowledge. A federal one-size-fits-all policy may not permit sufficient local experimentation to allow for needed evaluation. But if states experiment with diverse policies to help local labor markets create jobs, or to help the residents of distressed neighborhoods access jobs, this diversity potentially can be evaluated to see what works. A little later, I will make specific suggestions on how to improve state-level evaluations. Politically, neither federal nor state governments have a good track record on targeting distressed places. Targeting places at any level of government is politically difficult. At the federal level, distressed local labor markets have only occasionally been seriously targeted, in politically unusual circumstances. The Tennessee Valley Authority was a large-scale and serious local development policy, which at its peak provided annual funding of more than $300 per capita (in 2020 dollars). It was adopted during the New Deal as a demonstration project, but a demonstration project that led to no similarly scaled projects in other regions. The Appalachian Regional Commission, begun in the 1960s, was also a serious development program, with peak annual funding in the early 1970s of around $85 per capita (again, in 2020 dollars). But it, again, was adopted during an unusual political period, the Great Society era, and has not led to similar assistance for other distressed areas.