Late last year, the Birmingham grocery delivery company Shipt was sold to Target for $550 million. The rapid growth of the company represents the ingenuity and entrepreneurial spirit that are re-defining a new generation of builders in Birmingham. Shipt’s success invigorated the innovation ecosystem in Birmingham, garnered national attention, and drove new partnerships, such as Rise of the Rest. Perhaps most importantly, it nurtured the imagination of Birmingham’s entrepreneurs.
When a startup like Shipt sells, cities like ours find it bittersweet. The pride of seeing a homegrown company succeed was matched by the fear that jobs could be lost to larger markets like the Bay Area — where Shipt already has a considerable amount of employees — or Minneapolis, where Target is headquartered.
To help keep these jobs at home, Birmingham took a page out of Shipt’s playbook. As a city government, we innovated.
Birmingham was quite literally built by the steel industry, and we maintain a legacy as a robust hub of advanced manufacturing today. Our city’s incentive toolbox was built to recruit these industrial manufacturers, offering large property and sales tax abatement with long-term agreements. However, those tools are too blunt for the modern tech company.
Incentive schemes for industrial manufacturers simply won’t work for a new generation of tech companies seeking talent that is highly skilled, mobile, and dynamic. We had to engineer a new approach.
Challenged and inspired by Shipt, the City of Birmingham’s Department of Innovation and Economic Opportunity worked alongside company leadership to co-design an incentive package customized for the growing tech company. In partnership with the State Department of Commerce, the Jefferson County Commission and many others, our team developed the “Putting People First Fund” to make a compelling case for why Shipt — and the 881 jobs it is poised to create over the next three years — should remain in Birmingham. Through the process of co-creating this retention strategy with Shipt, Birmingham developed a modern, talent-driven model that empowers tech-based companies to grow and flourish here.
The Putting People First Fund uses additional tax revenue collected from the economic impact of high-skill, high-wage job growth, to launch three modern incentive tools: Talent Acceleration Program, Talent Investment Program, and Talent Optimization Program. We believe this strategy is a more sustainable way to incentivize growth because it invests in Birmingham’s greatest asset: our people.
Talent Acceleration Program (TAP) funds are specifically designated for advancing low-wage and lower-skilled employees into higher positions within the company. This funding can go toward tuition assistance with company-designed training programs that focus on developing certain skills that will help employees upskill and climb the employment ladder. TAP funds could apply to boot camps, certificates, seminars, conferences, or post-secondary institutions — anything that will strengthen employees’ knowledge and credentials to increase employment potential and production.
Using real-time data from our partners at Burning Glass Technologies, Talent Investment Program (TIP) will supplement wages for occupations where regional labor demand consistently outpaces supply, such as web developers or product managers at Shipt. TIP invests in a company’s ability to recruit high-skilled workers who are difficult to find locally but are essential to the company’s growth.
Talent Optimization Program (TOP) is the linchpin of our talent retention strategy, and it addresses key gaps we’ve identified in the local labor market. TOP intentionally cultivates local talent, like graduates of the Innovate Birmingham program, and provides funding to develop curricula to improve the management skills of our city’s mid-level managers.
Incentive schemes for industrial manufacturers simply won’t work for a new generation of tech companies seeking talent that is highly skilled, mobile, and dynamic. We had to engineer a new approach.
Mayor Woodfin was elected with a mandate to “Put People First.” This new program operationalizes his vision by investing in human capital to generate inclusive, sustainable economic growth for three main reasons.
First, by helping companies acquire and develop talent for high-demand occupations, companies can allocate capital to hire more workers and turn part-time jobs into full-time jobs. With more jobs and hours of work available, this program can help more people enter the workforce, especially by setting more dollars aside to train lower-skilled, lower-wage employees who want to move up in their companies or within their industry.
Second, the spillover effects of high-skill jobs make them particularly valuable for our economy. For each high-skill job created by our program, two or more jobs may be created for lower-skill workers.
Finally, Birmingham is competing with other regions across the country for quality jobs. With a forward-looking, highly customized tool to invest in workers, Birmingham can stand out as a place where municipal government is an enthusiastic partner that co-invests in innovation.
From steel mills to startups, Birmingham has always been a city of builders. As those builders change their product, city government should innovate alongside it. As our economy shifts, we are steering incentives toward cultivating human potential, so that Birmingham can grow, companies can thrive, and our people can prosper.
