New Orleans, LA — Asked how New Orleans recently managed to rank third — just below Silicon Valley (1st) and San Francisco (2nd) — when it comes to U.S. metro areas attracting information jobs, Michael Hecht of Greater New Orleans, Inc., a local economic development nonprofit group, says, “We realize that it may seem completely counterintuitive.”
However, the ranking, published last month by Forbes, is just one of a number of recently published rankings that underscore the notion that New Orleans is creating jobs — and lots of them.
Says Hecht, “We’re the sleeper arbitrage opportunity for business in America. You can do better for less, here in New Orleans, than in any other place in America.”
Hecht’s point of view about America’s arbitrage opportunity was no doubt shaped in part by an earlier tour of duty working for New York City Mayor Michael Bloomberg, where as an assistant commissioner he got to study and maneuver the economic levers of a plus-size employment market.
Hecht continues: “This region is 30 to 40 percent less expensive than markets like New York in terms of labor and space, and that goes for housing as well.”
Next, says Hecht, is the region’s willingness to use cash incentives. Among Louisiana’s most generous incentives is a 35 percent tax credit on all labor directly involved in the development of “interactive products” and a 25 percent tax credit on qualified digital media production expenditures.
“Basically, you’re getting 35 percent of your production costs back as a rebate. So that’s 35 percent of labor, hardware, and overhead for producing a title that these companies now get back,” explains Hecht.
Gameloft is just one of number of game publishers that the state’s rebate has helped to attract. As a leading publisher of mobile games, Gameloft made New Orleans its second North American location a little over 2 years ago, helping to fatten the employment opportunities surrounding the city’s digital media, production, and gaming industries.
Still, it’s one thing to create digital jobs and another to fill them.
Hecht says that although New Orleans has been making steady progress in doing just, with a 29 percent increase in IT employment since 2009, the challenge still remains front-of-mind.
“If we’re being honest, the answer is ‘No, we do not have enough local talent to fill all of this demand,’ but the good news is that people are willing to move here, and while this requires some recruiting, it seems to be working,” Hecht explains.
Among the larger companies creating jobs in the greater New Orleans region is General Electric Corp., which recently established a new technology center.
“GE is filling 300 jobs here — they’re getting about half of their people locally, while the other half they’re recruiting from other parts of the country,” says Hecht.
To help better satisfy the region’s appetite for talent, a few years back Hecht helped to establish a worker-training curriculum and program known as Louisiana’s FastStart, in part replicating some of the worker training approaches already in use by the State of Georgia.
“We looked around and determined that Georgia was doing it best and that their program had become a real advantage for businesses in that state,” explains Hecht, who says that the intent of the program was to offload some of the training costs that businesses have traditionally needed to incur to prepare job candidates.
According to Hecht, the steady growth of employment opportunities within the greater New Orleans region is related to a new set of economic conditions and a new outlook.
“This is about developing a better business product, and this about getting away from the idea that you have to bribe businesses with incentives to overcome your deficiencies. Instead, it’s about putting the right policies in place that create a set of economic conditions that lead to natural growth,” says Hecht, who credits the new approach with leveling the playing field for all businesses.
He adds: “Lower-middle-market companies are less likely to get the tens of millions of dollars of incentives that Fortune 500 companies are offered by different states, but they can very much benefit from good market conditions.”