Can a burst of multimillion-dollar federal grants help revitalize even the most economically stagnant communities in America? The Biden administration is betting on it.
On Monday, officials from the Department of Commerce announced the first six recipients to receive grants through the Economic Development Administration’s (EDA) Distressed Area Recompete Pilot Program. Part of the CHIPS and Science Act of 2022, the Recompete program is designed to fund job creation and other economic development initiatives in “distressed” communities—that is, localities suffering from high unemployment and poverty rates and low median household income.
Those economic development initiatives include job training programs, access to “wraparound” services like transportation and childcare, critical infrastructure, and small business support “that will allow Americans to take advantage of new opportunities,” said Lael Brainard, White House National Economic Advisor and co-chair of the CHIPS Implementation Steering Council, in a call with reporters ahead of the Monday announcement. And since the program is “place-based”—meaning it packages together different measures in order to promote jobs and stimulate growth in a given area—the funding “is flexible [so] communities can target specific developments,” Brainard said.
The grants total $184 million. Its recipients include the city of Allentown, Pennsylvania, which requested and received $20 million for “connecting underserved communities to high-opportunity industries”; Washington State’s Callum County, which recieved $50 million to revitalize the natural resources industries in the state’s North Olympic Peninsula; Puerto Rico’s Platform for Social Impact, which received $30 million to invest in public housing and other domestic support services; the city of Birmingham, Alabama, which received $20 million to counteract “a legacy of disinvestment, systemic racism, pollution, and land use decisions”; the innovation hub Shaping Our Appalachian Region, which received $40 million to reduce barriers to employment in southeastern Kentucky; and the Wind River Development Fund, which received $36 million to catalyze “an indigenous-led, eco-tourism economy” on the Wind River Indian Reservation and Fremont County, Wyoming.
These communities won’t have to implement these new initiatives alone: the six awardees submitted 300 commitments from private-sector companies, local governments, and philanthropies, totaling about $350 million in “complementary investments” to fulfill their vision of community-based economic development.
“Through partnership with local communities, the Recompete program will make targeted, community-led investments to reduce unemployment,” Assistant Secretary of Commerce for Economic Development Alejandra Castillo said on the call with reporters. “The Recompete awardees are bringing together a wide range of partners to develop integrated approaches to support Americans in accessing good jobs.”
The program can’t start doling out funds soon enough. According to data from the bipartisan Economic Innovation Group, roughly one in six Americans live in an economically distressed zip code. Indeed, the EDA says it received 565 applications for the initial Phase 1 of the Recompete program, the largest number of applications of any national grant competition ever, according to the agency, reflecting a massive need for direct investment among distressed communities.
The White House has been quick to contrast the Recompete program to former President Donald Trump’s tax cuts and incentive-based ‘opportunity zone’ approach to local economic development, the results of which are decidedly mixed. President Joe Biden has in the past blasted “decades of discrimination and trickle-down economics” (the latter a staple of the Trump administration) as the source of cities’ economic woes.
Administration officials echoed Biden’s rebuke of trickle-down economics when announcing the Recompete awardees on Monday, invoking Allentown in particular as a symbol of the White House’s economic policy successes.
“Allentown saw factories close as a result of trickle-down economics,” as Brainard said of the decades-long decline of the city’s steel industry and rebound under the Biden administration. “Allentown will now be able to connect people to opportunities in manufacturing and healthcare through the Recompete program.”
Speaking to reporters, Brainard cited a July Economic Innovation Group study that indicated nearly 1,000 “left-behind” counties across the country “have just experienced their strongest three-year period of job creation and business growth since the turn of the 21st century.”
Recompete’s success might seem, then, like a foregone conclusion. But according to analysis from the Brooking Institution, on whose research Recompete is based, success is far from assured despite the relative achievements of other place-based Biden administration initiatives.
At the core of the matter is funding. The original Recompete Act of 2022, initially introduced by Rep. Derek Kilmer (D-Wash.), was originally crafted to provide for $175 billion in funding over 10 years to the vast majority of distressed areas across the country, a major community-level investment of federal resources, as a September 2023 Brookings assessment notes. This ask was drastically reduced to just $1 billion authorized under the CHIPS Act, with only $200 million actually appropriated for the program. Political realities like the current legislative climate and federal deficits have essentially reduced Recompete to a small-scale pilot program which may not be expansive enough to fully test the program’s core concepts—and, in turn, gain political support for further expansion.
“Due to the limited funding, there is a risk that the nation will not be able to authentically test the Recompete concept to see if it works,” the Brookings report reads. “Even if the program’s true benefits exceed its costs, it might not have large enough effects to be discernible.”
In addition to the reduced amount of funding, the one-time nature of the Recompete grants (rather than spread over a decade as Rep. Kilmer’s originally proposed) will complicate future assessments of the program’s impact, according to Brookings.
It will be years before the EDA can start effectively assessing the impact of the Recompete program—and, with Americans headed to the polls in the coming months, the country may end up with an administration with a very different vision for stimulating economic development in distressed communities. But until that moment arrives, the Biden administration is betting that Recompete will prove representative of its promise to communities long left on the sidelines of national economic growth.