Friday Roundup: Thriving small towns, “beautiful” big business, the “sacrosanct salary schedule,” and soaring job openings

There are always a few items we’ve read during the week that deserve more attention but don’t make it into our regular posts. So we bundle them for the Friday roundup.

Here’s this week’s bundle:

New Geography: Where Small Town America is Thriving

The resurgence of manufacturing and energy development has helped many smaller towns (these sectors tend to be more critical to smaller economies). Recent demographic data show a movement away from expensive coastal cities, including millennials, who tend to look for affordable single-family homes. The number of rural home mortgages has increased for five straight years, though the increase trails the rate in urban areas, and nearly twice as many millennials, according to the National Association of Realtors, bought home in small cities or rural areas last year than in denser urban areas.

There is no question that opportunity is generated by agglomeration of talent and economic activity. Yet agglomeration creates benefits at the 10,000-person scale just as it does the 10 million-person scale. Local economic specialization and competitive advantage matter. Easier access to global markets and worker flexibility enabled by technology make local strategy execution more important, not less.

Many small cities present a promise of safety, quality education and work-life balance. The prospect of economic decentralization is a chance to leverage these qualities. However, success will not be evenly distributed. Only those small cities able to assemble the right mix of talent, market focus, and civic cooperation will succeed.

The Atlantic (Atkinson and Lind): Is Big Business Really That Bad?

The depredations of a few job cutters have earned Big Business a reputation for heartless streamlining, but employment at large businesses is in fact steadier than at small businesses. In 2015, small enterprises were four times more likely to lay off their workers than large ones. Workers employed by large firms also earned more—on average, 54 percent more than workers at small companies. Companies with more than 500 employees offer 2.5 times more paid leave and insurance benefits and 3.9 times more in retirement benefits than workers at firms with fewer than 100 employees. Large firms are also more likely to be unionized, and they employ a greater share of women and minorities than small firms do, making Big Business an unlikely enemy of progressives.

Big companies also create more net jobs. This will surely come as a surprise to many Americans, who have been handed down the hoary legend that small business is the engine of job creation. The origins of this misimpression began with David Birch, an MIT researcher, who in the late 1970s purported to show that, from 1969 to 1976, companies with 100 or fewer employees created more than 80 percent of all new jobs. A few economists have found similar results, but many others have criticized Birch’s methods and conclusions. The economist Catherine Armington found that, from 1976 to 1982, small firms were responsible for just 56 percent of new jobs, much closer to their share of total jobs in the U.S. Even Birch himself has acknowledged that his results rely on a series of assumptions very much open for debate…

A dynamic economy requires the interaction of firms of all sizes. Small firms play legitimate if diminished roles today, and always will. To flourish in the 21st century, we must learn again that big can be beautiful, too.

Education Next: Scrap the Sacrosanct Salary Schedule

Lost in the debate over merit pay are some interesting, and to some extent disturbing, facts about the way we currently distribute compensation to teachers. Most districts reward teachers for their years of experience, advanced degrees, and in some cases special credentials such as a certificate from the National Board for Professional Teaching Standards (NBPTS). If every year of experience and every credential were strongly associated with a teacher’s ability to educate students, we could feel content that our system rewarded the ability to educate de facto. But the available evidence suggests that the connection between credentials and teaching effectiveness is very weak at best, and the connection between additional years of experience and teaching effectiveness, while substantial in the first few years in the classroom, attenuates over time. Though exact results vary from one study to the next, there is little doubt that credentials and additional years of experience (beyond the first few years) matter far less to teacher effectiveness than they do to teacher compensation as it is currently designed.

What if, rather than proposing a direct pay-for-performance system, we took the intermediate step of stopping the practice of paying rewards for credentials that have no established association with the ability to educate students? A simple case study, based on the teacher workforce in North Carolina, suggests that this policy change would return several dividends.

Associated Press: Job openings soar to record high of 6.3 million

U.S. employers sharply ramped up their demand for workers in January, advertising 6.3 million jobs at the end of the month, the most on records dating back 17 years.

The Labor Department says the number of job opening soared 645,000 in January, the largest one-month increase in 2½ years. The number of people hired ticked up and fewer Americans quit in January compared with the previous month.

The huge demand for workers comes as the unemployment rate is already at a 17-year low of 4.1 percent.