A Growing Economy

Montgomery County’s high wealth and low unemployment rate mask economic disparities as well as other warning signs, such as slow business growth and problems with office vacancies. Maintaining and improving our quality of life depends on a strong local economy. We need to have a business friendly attitude and incubate the next generation of job creators.

Key Indicator I.
Number of Net New Businesses

About this Indicator: The Number of Net New Businesses is the annual number of private business establishments in the County as reported by the Bureau of Labor Statistics subtracted from the prior year’s number.
1.  How are we doing?
Net New Businesses 
While the overall number of private businesses has remained fairly constant since the 2011 baseline year, we have seen a decline in 2014 and 2015 from which we have only started to recover. At the same time, the number of Proprietorships in the County has been steadily increasing year over year, making up a growing share of total employment.
2.  What is the story behind the curve?
Positive Factors
 The County’s workforce.  Montgomery County boasts a large, well-educated, and diverse workforce.
 Infrastructure and proximity.  New and expanding businesses are attracted by a good transit system, proximity to Washington, D.C., the presence of numerous federal agencies as well as several multinational corporations, a County government with a AAA bond rating, and access to capital and loans through a variety of institutions.  
 Our immigrant population.  Our diverse, entrepreneurial, and innovative immigrant population is a largely untapped asset, bolstered by the County’s welcoming attitude towards immigrants.  In FY18, the County purchased 23.5% of eligible goods and services from MFD (Minority, Female, Disabled)-owned companies, exceeding the 20% goal. 
Negative Factors
 The cost of doing business.  Montgomery County is an expensive place to do business. The costs of purchasing or renting space, parking, equipment, taxes, competing for talent in a tight labor market, and other needs add up quickly, especially for small businesses.
 Difficulties working with the County government.  Businesses complain that is it difficult to work with County Government, citing unfriendly permitting and regulatory processes, a lack of clear and consistent guidance for understanding and navigating all the business apparatuses (MCEDC, Workforce Montgomery, Small Business Navigator, etc.), no emphasis on timeliness and transparency, and a general sense that the County’s business environment is not cohesive, solution-oriented or welcoming enough to people who want to set up shop here.  In addition, regulations that must be adhered to can be burdensome and zoning restrictions can limit potential location opportunities.  
 Minority access to capital.  Minority residents are often disadvantaged when it comes to accessing the necessary capital or loans needed to start or grow a business.  
3.  What strategies do we recommend to turn the curve?
 1)      Articulate a culture of business opportunity in Montgomery County
a.      Develop and, with the County Executive’s leadership, promote a distinct business “identity” for the County. 
b.      Create a “culture of yes” within County Government.  When a business comes to the County with issues, the answer should always be “yes, let’s work this out.”  Debunk the narrative that the County Executive is “anti-business.”
c.       Build a culture of innovation and entrepreneurship for small businesses (the crtieria for qualifying as a small business are set by the County and vary depending on the type of business), utilizing government, media, and large businesses.
d.      Provide more and better marketing for the County and our existing businesses of all sizes, emphasizing the value proposition of Montgomery County. Create an easy to find and use directory of all available resources, and ensure County employees are aware of where to direct inquiries.
 2)      Streamline resources and processes related to doing business with the County.
a.      Streamline the resources and processes related to doing business with the County, including eliminating redundancies across resources.
b.      Benchmark county permitting regulations against competing jurisdictions and eliminate unnecessary regulations.
c.       Everyone from small businesses to major corporations should know where they can go for correct and consistent answers.
d.      Put small business advisors and procurement specialists in the Regional Service Centers.
 3)      Support minority/immigrant businesses and fully understand their value
a.      Improve, expand, and/or incentivize County partnerships with non-profits, other jurisdictions, banks and credit unions to increase services and other forms of support to to immigrants and minorities.
b.      Implement inclusive economic development: Differentiate and customize the approach towards minority-owned businesses.  Place a greater emphasis on encouraging and supporting women-owned businesses.  Consider giving under-represented groups additional points in the procurement process.
 4)      Establish and support County incubators.  Establish and support innovation through County incubators by identifying currently empty space that could house them and connect them to Montgomery College and mentoring programs.
5)      Provide better/more support for the local economy.
a.      Urge residents and businesses to buy and hire local.
b.      Leverage regional projects (Purple Line, Amazon HQ2) to support business development and retention here.
c.       Assist small businesses that might otherwise fail when revenue is lost as a result of County construction projects (e.g. Expand the current program in Wheaton related to the Purple Line to other locations).
d.      Create a small business advisory council.
e.      Give small businesses more access to capital and the County’s open/vacant spaces.
f.        Use tax policy to attract and encourage small businesses (e.g. implement small business tax credits based on job creation).

Key Indicator II.  
Number of Family-Sustaining Jobs

About this Indicator: Understanding our local economy requires seeing the growth or reduction in jobs that require different levels of skill and offer different levels of compensation. We have defined three income categories as follows: Low = <75% of Median Income, Middle = Between 75% and 125% of Median Income, and High = ≥125% of Median Income. Median Earnings in 2018 = $51,626.
The County has far more Low and High earning jobs than Medium income jobs that can serve as a springboard to higher earnings; additionally, while the numbers fluctuate from year to year, the number of High-income earners saw negative growth in the most recent reporting year.
 2.  What is the story behind the curve?
Positive Factors
 County’s Smart Growth strategyThe County has been implementing a Smart Growth strategy for many years and boasts both existing high-skill jobs and many good resources for workforce training that appeal to and serve our highly entrepreneurial workforce. 
 Alternative night economy.  The strong presence of an “alternative night economy” attracts people from neighboring jurisdictions to our many immigrant-specific establishments open at night across the County.
 Amazon headquarters in Arlington.  Amazon HQ2’s new location in Arlington, VA may create economic opportunities here, such as fostering small business tech start-ups in the County.
Negative Factors
 Disconnection between economic development and poverty alleviation.  There is no coordination between economic development and poverty alleviation, including with our state and federal counterparts.  The downside of our investment in Smart Growth has been a degradation of affordable communities with existing resources distributed inequitably across the County while services for those most in need only manage the symptoms.  
 Service economy educational pipeline.  Montgomery County’s economy is largely a service economy; existing low-skill workers encounter both a lack of trade jobs and limited opportunities to learn trades that offer higher-wages, while high school students are not directed towards high-skill majors or high-paying lower-skill trade jobs for those who will not go to college.
 Challenging environment for small businesses.  Small businesses are challenged by increasing overhead and an environment that fails to foster the types of small businesses that accompany and complement large ones. 
 Competition with neighboring jurisdictions.   All businesses are facing competition with our neighboring jurisdictions on salaries/wages, resulting in a “race to the bottom.”
 Insufficient advocacy.  Nearly all demographic groups lack adequate advocacy on their behalf. In particular, minorities and entrepreneurs need more recognition and opportunity, seniors need improved workforce development/retraining, and highly-skilled workers need help connecting to the types of jobs for which they are trained.
3.  What strategies do we recommend to turn the curve?
 1)      Establish a senior position on poverty alleviation and economic development.  Create a high-level position in County Government that focuses on the intersections between poverty alleviation and economic development, bridging these policy areas. 
 2)      Support and improve the pre-K to jobs pipeline.
a.      Improve, expand, and incentivize education tied to professional success, from STEAM (Science, Technology, Engineering, Arts and Math) classes for younger students to mentorships for older students to better integration with universities in the region to support a path from Montgomery County Pubic Schools to high-skill job preparation (including green jobs) at the college level. 
b.      Financially support education through guaranteed post-secondary education for all county residents, provide free pre-school and affordable child care, and subsidize technical certifications.
c.       Encourage anyone in the County who wants to go into the Information Technology field to attend Montgomery College’s subsidized programs.
d.      For the trades, partner with the Trade Unions to train residents in apprenticeships.
 3)      Focus investments on the areas of greatest need in the county.
Invest in strategies that join economic development and poverty alleviation in the areas of greatest need: East County, Gaithersburg, Germantown and Wheaton.
 4)      Support local business owners and workers.
a.      Increase County support for local business owners and workers through strategies such as: 
   i.      the provision of liability insurance for people wanting to start a small business;
   ii.      the County retirement plan providing low-cost mortgages;
   iii.      a County retirement savings program;
   iv.      the creation of a County debt relief program (similar to the federal government);
   v.      the expansion of the County’s Welcome Center to add more capacity.
b.      Support budding entrepreneurs with new programs such as an incubator where they can work from home (while watching their children) and can make products to be sold through the incubator.
c.       Encourage joint ventures between smaller businesses to better compete for contracts and incentivize mentoring to educate small businesses on the county’s procurement process.
d.      Establish partnerships with medium and large businesses to create fellowships (even unpaid) to help mothers who left the labor force reintegrate back into the job market.
 5)      Stronger support for immigrant populationTake a stronger stance to protect and advocate for the County’s immigrant population to boost their chances of achieving financial success and security (e.g. actively push to make County Green Card holders U.S. citizens) with a focus on East County, Gaithersburg, and Germantown.

Key Indicator III.
Unemployment Rate Gap

About this Indicator: The Unemployment Rate Gap is the difference between the unemployment rates of White residents versus residents of all other races. Rates are calculated using Census unemployment and total labor force data.
 1.  How are we doing?
Source: Census ACS 1-Year Tables
While the gaps between the various population cohorts are narrowing as unemployment rates are generally trending in the right direction, certainly more can be done to close them through increased professional opportunities for the County’s minorities.
 2.  What is the story behind the curve?
Positive Factors
Leadership commitmentsThe new County Executive and Council have expressed strong commitments to racial equity.
 A common framework.  Informed by a highly-regarded racial equity workshop from the Racial Equity Institute offered Countywide by Leadership Montgomery, leaders in the County are developing a common framework for addressing racial equity in the County.
 Untapped resources.  The County has in its population untapped entrepreneurial and diverse resources that – in an equitable economy that provides for the basic needs of all while rewarding effort, talent, and skill – will fuel economic prosperity.
Negative Factors
Structural racism.  Historic and ongoing structural racism underlie disparities in employment and, correspondingly, educational achievement, health outcomes, access to housing, treatment in the justice system, wealth accumulation, political power, and geographic opportunity in the County. 
Lack of dialogue on racial equity.  There is minimal open dialogue on racial equity in the County.  Different reasons contribute to the reticence to engage, including the desire to avoid conflict that might be caused by sharing beliefs about the causes of racial inequity, a preference for the status quo over the unkown, a lack of empathy among whites, a sense of futility among minorities, and tribal mentalities.
Addressing the stem, not the root.   To the extent efforts are made to address racial disparities, those efforts are almost exclusively targeted to symptoms and not the root causes of those disparities.  The County’s progressive image is not supported by the substance of its efforts to address racial equity.
Isolation/Separation. The lack of interaction and understanding between different racial groups impacts business owners who are siloed within their own racial groups and do not discuss racial issues when interacting with other groups, impacting opportunities for employers and job candidates alike.
3.  What strategies do we recommend to turn the curve?
 1)      Establish the position of chief diversity/equity officer.  Create and appoint in the Office of the County Executive a minority individual as Chief Diversity/Racial Equity Officer.  The person should be:
a.      Empowered to address racial equity and justice in the County; 
b.      Accountable for ensuring that people in and across the County government have an understanding of structural racism and that departments are applying racial equity analyses to their programs and policies; and
c.       Able to provide “accountability reports” using performance metrics.
2)      Address structural racism.
a.      Address historical and structural racism in the County.
b.      Within County government, ensure that County employees understand  structural racism when developing and implementing County policies and programs.
c.       Create an ongoing scorecard under CountyStat on the state of racial equity to ensure that no minority groups are left behind in the wake of the County’s growth.
3)      Be bold in promoting economic development and addressing structural racism.  Market Montgomery County as a place that values and practices equity for all (race, gender, and all dimensions of our diversity) and be strategic with communications on racial issues, tying racial equity to business and workforce development.
 4)      Establish a permanent civil rights advisory committee.  Establish a permanent civil rights advisory committee that advises the County Executive on all minority/immigrant issues, separately from the current Human Right Commissions that reactively investigates incidents of hate/violence and complaints of discrimination
 5)      Foster Engagement.  Actively convene community minority group leaders to learn and grow together.

The Team

Team Captain:
Hoan Dang
Team Members:
Marilyn Balcombe
Mayra Bayonet
Kevin Beverly
Marla Bilonick
Alan Bowser
Warren Fleming
Terry Forde
Janice Freeman
Ronnie Galvin
Julian Haffner
Alicia Jones McLeod
Hamza Khan
Gerrit Knaap
Carmen Larsen
Omar Lazo

Matthew Lee
Greg LeRoy
Michael Lin
Hamza Khan
Gerrit Knaap
Carmen Larsen
Omar Lazo
Matthew Lee
Greg LeRoy
Edamarie Mattei
Rajan Natarajan
Andrew Nicklas
Jayne Park
Daniel Parra
Katalin Peter
DeRionne Pollard
Elisha Pulivarti
Saman Qadeer Ahmad

Sanjay Rai
Carmen Rojas
Devang Shah
Debbie Spielberg
Sam Statland
Tricia Swanson
Ivo Tasong
Caroline Taylor
Gustavo Torres
Greg Wims
Sarah Wolek
Ron Wright
Phil Lee
Matthew Rowen

Public feedback and questions from the CE’s Listening Sessions relating to this Priority Outcome reflect concerns about:
  • Growing private sector development and job numbers to expanding the tax base, both County-wide and specifically in East County beyond the Federal Government presence there.
  • Helping small businesses and incubators start and grow through: offering procurement preferences to local businesses); locating tech/biotech businesses on Montgomery College campuses; and assisting local businesses that serve as community anchors/gathering spots (e.g. bookstores).
  • Addressing the large numbers of empty storefronts in existing retail/commercial areas.
  • Supporting economic empowerment for women and minorities.
  • Keeping our well-educated students and the wealthy residents/taxpayers in the County 
A public survey on the transition website collected input from residents as well; Respondents conveyed the following related to this Priority Outcome:
  • The most frequently recommended measure was support for small businesses and entrepreneurs. Multiple respondents suggested business incubators, and there was widespread acknowledgment of the value of small businesses to the county.
  • Responses commonly dealt with the importance of attracting and retaining businesses. Suggested methods included alleviating bureaucratic burdens, including streamlining the permitting process and curtailing regulations. Some respondents named technology, health, and biotechnology specifically as desirable industries to foster in the county. Viewpoints on business attraction incentives were mixed, with some supporting and others opposing tax breaks. Suggestions for fostering a business-friendly environment touched on the importance of cooperation within the business community and between business and government, and measures to encourage innovation.
  • The importance of promoting equity and diversity among business owners and residents of various socio-economic backgrounds was a focus of multiple responses.
  • Responses regarding tax policy included support for impact fees.
  • Other topics included in multiple responses were attracting residents, schools’ role in growing the economy, and social responsibility.

Performance Index: A Growing Economy

Below can be found the Montgomery County Government Departmental Performance Measures that align with the County Executive's Priority to grow the Economy.