The Importance of Entrepreneur Zones
Small businesses are the largest employers in the United States. These enterprises are the heart of the middle class, because they provide the income that residents need to survive in this challenging economy. Increasing the number of successful entrepreneurial businesses in every community in the United States is the only sustainable way to generate the tax revenue and employment necessary to reduce taxes and help the country through its current fiscal crisis. This is especially true in the poorest urban communities.
I believe that the best social program is a job. The quickest way to turn around low-income communities is to create new jobs that provide previously poor households with the income they need to pay their monthly bills on time. The Unemployment Rate Index (URI) is a measure I developed to estimate the number of jobs required to make the municipal unemployment rate equivalent to the state unemployment rate. To calculate the URI, I simply subtract the state unemployment rate percentage as determined by the federal Bureau of Labor Statistics (4% in my home state of New Jersey in 2019) from the municipal unemployment percentage calculated by the U.S. Census. I then multiplied that percentage difference by the municipal population. The resulting number represents the number of new jobs needed for the municipality to have the same unemployment rate as the state.
The URI results are insightful because they suggest that, in the largest city in New Jersey, Newark, an increase of 23,768 jobs would significantly increase student academic achievement, reduce crime and enhance the quality of life in the city. However, in the second largest city in the state, Jersey City, only 7,113 new jobs are needed to make the same transformation. The relocation of firms from New York City’s Wall Street to Jersey City accounts for the significant difference in jobs needed in two cities of similar size. The wonderful thing about this analysis is that it can be utilized in any municipality in the country.
The most effective way to create these jobs is for the state to provide the tax incentives, regulation relief and financial support that local entrepreneurs need to help them increase profitability and employment in the local community. I believe that every governor and state legislature in the country should work together to create jobs through something that I call “Entrepreneur Zones,” or “EZones,” within the poorest sections of existing Opportunity Zones.
The Tax Cuts and Jobs Act passed by Congress in 2017 contains a unique economic development and tax incentive called Opportunity Zones. This program was designed to encourage long-term private capital investment in low-income communities in the United States. The purpose of this tax incentive is to spur economic development and job creation in distressed communities by providing tax incentives to investors. However, Opportunity Zones encourage investment in real estate assets, not risky entrepreneurial businesses in poor communities.
I am suggesting that federal and state Entrepreneur Zone legislation be created to ensure that a significant amount of the money invested in Opportunity Zones is focused on increasing the number of jobs and business tax revenue for both municipalities and states. The establishment of Entrepreneur Zones should ensure that investments in Opportunity Zone locations are more impactful than they were in previous programs.
However, the jobs created should pay sufficient income to enable households to pay their basic expenses. Using the MIT Living Wage Calculator and the U.S. Census, I developed a measure of poverty called the Living Wage Index or “LWI.” This measure indicates the percentage of households in any municipality in the country that earn sufficient income to pay their basic bills. This data suggests that there is a major economic crisis in every city in the country. I define poverty as a household that does not earn enough money to pay their monthly bills. There are 144,634 households in Newark and 97,498 households in Jersey City who do not earn enough money to pay their basic bills. Tragically, in every major urban community in the United States, half or more of the households do not make enough money to pay their bills.
The only sustainable way to increase jobs and the LWI is for states and local governments to create Entrepreneur Zones and provide the incentives necessary to help these businesses succeed and create local jobs paying the income necessary to enable households to pay their monthly bills.
Dr. Dale Caldwell is the co-founder of the Black Excellence Alliance (BEA). He is a professor and the executive director of the Fairleigh Dickinson University (FDU) Rothman Institute of Innovation and Entrepreneurship. Dr. Caldwell is the author of six books including the ground-breaking book Intelligent Influence: The 4 Steps of Highly Successful Leaders and Organizations. He is the creator of the Entrepreneur Zone program and the founder of the Dale Caldwell Foundation, BlackFriendsMeet.com, the Black Executives Network, the Black Entrepreneurs Hall of Fame, the Black Executives Hall of Fame, the Black Inventors Hall of Fame and the Black Tennis Hall of Fame. These innovative organizations inspire black excellence and immortalize accomplished people who have been overlooked in the history books because of their race.
Dr. Caldwell earned a BA in Economics (with a minor in African American studies) from Princeton University, an MBA in Finance from the Wharton School of the University of Pennsylvania and a Doctorate from Seton Hall University. He is an International Coach Federation (ICF) Associate Certified Coach (ACC) who completed the Harvard Kennedy School Senior Executives in State and Local Government program and the Rutgers Leadership Coaching for Organizational Performance program.