Good morning. Thank you, Rita. Thank you all for being here again. I really am so excited with the ecosystem, with the diversity that's in this room of organizations across the deep south who care about prosperity for our neighbors. So, thank you. We are in for a treat this morning. For nine years, Raphael Bostic served as a president of the sixth district of the Federal Reserve. It is one of 12 reserve banks in the United States. It covers a large portion of the southeastern United States. It's headquartered in Atlanta and has bank branches in Birmingham, Alabama, Jacksonville, Miami, Florida, Nashville, Tennessee, and New Orleans. I've known Raphael for several years and got the privilege to work closer with him and see him work his magic over five years during my service on the board of the New Orleans Fed. Under his leadership in Atlanta, not only was Atlanta Fed an invaluable source of research and expertise for decision makers across the district, including Hope and our policy institute, but it was also widely respected across the entire Federal Reserve system for its innovation, creating tools that provided unique insights into the health of the economy at multiple levels. Not a week went by when Raphael wasn't on TV, the radio, at conferences talking about developments in the economy and what was needed to meet the Fed's dual mandate of full employment and low inflation. While on the New Orleans board, I had again the privilege of seeing his work up close on many occasions. Despite being one of the most brilliant economists on the planet — and I do not say that lightly — and having a team almost as brilliant translating data, analyzing tons of data, he always insisted that the bank look beyond the numbers. I particularly respected Raphael for charging each branch with getting out into community and actively drawing on insights from the real world, meeting with residents, nonprofits, community groups in addition to large employers and banks. Even more impressive is that he regularly joined them. I was with Raphael on visits to places like Auburn Rural Studios, the Kennedy Space Center, the Mississippi Children Museum in Meridian, Tabasco Island, Marty Craw World, but even more so, I was impressed and appreciated that he came to events that Hope organized with students at Mississippi Valley State in Natchez, here in Jackson at Jackson State and Tougaloo. Sat down with students and HBCU leaders to understand and help advance their critical role in creating prosperity in communities that need it most. All to say, I'd be hard-pressed to name another person who has as unique and as informed perspective about the economy of the deep south as Raphael Bostic. Raphael, thanks for joining us this morning.
Morning. [applause] Good morning, Bill. Can I just start by saying thank you for having me here. It's good to see all of you here in the audience. And you know, when I worked at the Atlanta Fed, I used to tell my folks the shortest introduction possible because now you've set expectations pretty high and so I'm gonna have to work up here.
All right. Fair. Fair enough. Can you hear me? Awesome. So Raphael, let's just jump in. You spent your career studying the economy in the southeast and across the country and engaging with business leaders, policymakers, communities. We're seeing an unprecedented level of investment flowing through the region: manufacturing, energy, logistics, healthcare, technology, infrastructure. As you look at this moment, what makes it different? Is it different from previous economic development cycles?
So I actually think it is quite different. And you know, in my lifetime, let me think about this at a very high level. So the course of human history, there have been technological innovations that have changed how business gets done, how work gets done. You think about there was a time when there wasn't a wheel. So the introduction of a wheel was an important thing. Electricity allowed a whole host of things to happen that couldn't have happened before. And then you think about computers and the idea that I remember when I used to have a Walkman and tape cassettes and all that kind of stuff to listen to music. Nobody does that anymore. I had an encyclopedia set, you know, Encyclopedia Britannica. Like that's how you had information. So that was a transformative thing. And now you think about AI, and I think AI is another one of those transformative technologies that will change how work gets done. And I think that imperative has driven a whole host of investments and commitments to try to be part of that wave. And I think, you know, as was reported yesterday, so much of the capital that is flowing here is about investing in infrastructure to facilitate AI's deployment into the economy. And because it's so transformative, I think that is — it's going to happen. Like this is not stuff that is notional or a hope, but I think there is really going to be a commitment to see all of these investments through so that places are not left behind as this technology takes hold.
You know, Raphael, I know when you were president of the Fed, I don't think it really affected your candor. But obviously you had to qualify that these are my opinions or be very measured because things you all said could shift markets. You know, you raised the importance of AI. Obviously a lot of the investments that are going through the region are to support the advancement of AI data centers. There are, as with everything, there are many sides of the story. There are the challenges and there's the opportunities that it unlocks. What's your — how do you think about balancing those realities?
Well, so change always brings disruption, and disruption can have good elements to it and it can have harder elements to it. I think in general with these things, the key is to be open and honest and talking about them because sometimes the downside stuff can be mitigated at low cost to the upside potential. And so, you know, I've gotten to a place now where I really try not to live in an either-or world. It's like you don't — if you do a data center, it's not either the data center is great or you don't do the data center and you have a community that's not impacted, right? And there got to be ways to get to both of them, but you're not going to get to both of them unless everyone is in a conversation to figure out how to get to that space. And so I think — and actually you're seeing this today in communities all over America where the regular folks don't feel like they've been in the conversation and that these things are being thrust on them and they don't like that. And so making sure that those conversations happen ex ante before things start moving down the pike increases the likelihood that they'll go in a way that is beneficial for everyone.
Agree, and that aligns with how we are approaching Delta Fest. Lisa and her team, my colleagues at Hope, we understand these investments are here. We're wanting to get out on the front end to position communities to optimize them so that they benefit not just a few but the entire economy. And it's not just AI. I want to be clear about that. We are talking about advanced manufacturing, energy, healthcare, transportation, technology, infrastructure, logistics, broadband, healthcare, and I mean education. Where do you see the greatest opportunities emerging over the coming decade?
So I think there are a couple. So I think one class is in the construction space, right? If you're going to do broadband, if you're going to put up data centers, that is building, that is going to be wood and welding, plumbing, like just the basic things. And you know, for many years, we've had shortages in almost all of those spaces. And so there is an opportunity to fill those voids with local folks who can actually do the work. And it turns out because we've had so many shortages, those jobs come with good wages. And because there's a large volume of work that needs to be done, my expectation is that the demand for workers like that is going to be large for quite some time. So I think that's one space that is important. A second space I think is around leveraging the information economy and figuring out how to be productive in that space. So there are going to be a bunch of jobs there already are right now in terms of managing information, helping businesses function, be visible and thrive in information economy environments, helping universities and schools use their information connections to make sure that people are aware of where there are opportunities, and that benefits those institutions as well because they will get a student base. There are lots of ways to leverage that information economy. And some of that is stuff that I think young people are particularly well suited for. Like don't ask me to do a TikTok video. Like I'm in one as a cameo, but you don't want me running it. But those are the things and those are the ways that people are finding out about things and consuming information. So the more that you have people that do that as well, that is good as well. And then you mentioned healthcare. Healthcare is another area where there has been a tremendous shortage of people. And so I do think there are opportunities there in two dimensions in particular. So one, we know that rural healthcare is strained because of how the business models for health institutions are designed. And so if there are ways that you find creative ways to get people to rethink what healthcare in rural and poorer places can look like, that's an opportunity. And then the second piece there is the demographics of the US are pretty clear. The proportion of people who are older is increasing and old people are living longer. I'm personally grateful for that. So I'm hoping to take advantage of that. But that means that there is a whole set of services that are going to need to be augmented and increased to serve those populations, and that's another real opportunity.
Now it sounds like there's a lot of possibilities. And job creation is obviously an important aspect. But beyond job creation, what broader economic impact should communities be tracking and driving for? What kind of metrics should local leaders use to determine whether the investments are truly benefiting the people who need it most?
So you know, it's an interesting question. I have done some work in the past on the idea of like anchor institutions where you have sort of a large employer or a major activity that then becomes a focal point for a lot of the supportive opportunities or activities that would be around them. So like a hospital lands somewhere, a university lands somewhere, like there are these big employers and they bring people with them. They got to have places to live. So what share of the people live in the communities? Because if they live in those communities, that generates a level of activity. You've got to have restaurants, you got to have food access, you've got to have like barber shops, cleaners. Like it winds up building a broader infrastructure or community infrastructure that then can keep the capital in the community and allow it to be recycled in creative ways. And so one of the things I would be thinking about is first understanding like what the medium and long-term job prospects are, like how many new people are we talking about in these places. And some of those new people may be existing people who find jobs in those places. And then two, figure out like get projections on what's going to be needed in terms of housing. What are the price points for that housing? How do you deploy it in ways that would generate maybe a town center with a bank and a grocery store and some — and as you start to build out into a community that can flourish and be self-sustaining. Those would be the things I'd be looking for.
You just touched on several elements that are at the center of the conversations we're having at Delta Fest: community infrastructure, making sure that the supports are there to fuel economic prosperity. You've traveled extensively and know the southeast, the deep south, as well as anyone. What separates regions that can convert large-scale investment into broadly shared prosperity from those where the benefits remain concentrated in the hands of a few?
So I think it's — I guess the word I would say is intentionality and creating a culture, a community culture and a regional culture that says we thrive when we all thrive and we will be more if we all are more. You know, one of the things that I've often said is I don't know who has the next good idea. I don't know who are the ones in our midst who are going to have that next transformative instinct that moves all of us better. And what I do know is — and we've all seen this — there are big ideas, there are innovators that come from unusual places or unexpected places that then change all of us. And so if we can get everyone to understand that in our broader regions, like we don't — the world is incredibly competitive, so we better be bringing everyone to the table and everyone in their best ways to the table so that we can show up different and inspire people to come and be with us.
Oh, I couldn't agree more. I think about over Hope's 30-plus years, so many incredible people I've met in the Delta, in the Black Belt, in inner cities, who — it's shocking how they do more with less, you know, same thing for some of the institutions, HBCUs. And so your point about where innovation and the best ideas can come from — necessity is the mother of invention, as they say. And we certainly see that over and over. And you know, this goes back to what we were talking about before with the information economy and telling stories and like the creative class about changing and creating narratives because you know, folks have not been to Jackson before, that doesn't mean they don't have an idea about what's happening here, right? And so when I moved to Atlanta, people in Southern California had an idea about what happened in Atlanta.
Right. So this is something that happens all the time and finding ways to generate opportunities to create narratives that push in the way you want the narrative to be as opposed to just being a passive assessor of whatever the narrative happens to be — I think that's another opportunity that lies out there. Information flows now are much more democratic than they've ever been. Like anybody can get up and tell their narratives and you can get to people more directly today than you could when I was a child. And that creates an opportunity for places to show up differently, to surprise folks and to generate narrative and excitement in ways that has not been possible before.
I think we all have seen over the past few years how controlling the narrative, how powerful that can be. And I think it's critical that our communities control their own narrative and drive their own destiny by being clear about their value and their potential.
Yeah. So you just reminded me when I was teaching at USC, I taught a class in affordable housing development and there was one segment where we just talked about telling the story, tell a narrative, talking about what the project is and then what the project isn't because everyone has an idea about what public housing is and how it plays out. Everyone has an idea about who is living in those homes and what they do and don't do and how they act. And 98% of that is wrong. But because no one is actually actively telling the story and putting it in front of people's minds and challenging those preconceptions, the preconception lives on. Even today, it's hard to do affordable housing in many communities because people don't actually know what it really is. And you know, with the nonprofit space, for example, a lot of affordable housing builders, they're working to the bone. They don't have extra folks, and so they wind up just working and they don't have the space to tell the story that would actually help the whole sector be more effective. And so the storytelling I think is actually quite important in terms of — actually I think it could ultimately free up capital and free up opportunities.
I had forgotten that you actually, among your many careers and experiences, you spent time as a community development guy. So I suspect that informed your approach to leading the Fed and again as I shared earlier, getting out from behind the desk and getting into community. Personally, I like to see — I feel like when I see it and I'm close to it and I touch it, I understand it better. I understand the opportunities. I see the passion and the energy of people about their communities which is quite powerful and inspiring. But then I also get a better sense of some of the challenges and how if we come together in creative and different ways, we can get to different outcomes. And so one of the things I loved about the Fed is that we were able to create spaces where we would invite people who should know each other but have never met each other and then can curate a conversation that then translates into a new relationship, a new opportunity, a new partnership that then can push forward and do new things. I actually think Delta Fest is an opportunity for that where I just looked at the list of people who are attendees. Like you got people from everywhere. Many of them I'm guessing have never met each other, but this is an opportunity to find ways to partner and pair and build new connections that then can advance ideas and dreams and initiatives to try to make sure that the places thrive.
That is indeed the goal. Raphael, you have, I know, passion for this and have seen it in many of the conversations that you were part of at the Fed. Many communities are excited about incoming projects, but a concern about whether local residents will be prepared to fill the jobs. You know, what should regions think about work? How should we think about workforce development differently? What are some of the skills that are becoming most valuable? How should educational institutions, community colleges, workforce programs, HBCUs — what are some of the things they should be thinking about and perhaps adapt to meet this moment?
So I say a couple things on this. So one, historically the US has been terrible in workforce development. Now we don't really invest in it well. We don't develop systems and structures and infrastructure to be robust and consistently forward-looking to help people. And historically our experience in this country has been if you get disrupted out, good luck, we hope you find something, it'll work itself out somehow. I think that has worked in the past because the new technologies weren't so distant from the existing ones and so when you lost a job you could find another job in a related sector without necessarily needing to be radically retrained. I think the thing that's different today is that a lot of folks are being disrupted that have a skill set that is very different from the skills they're going to need to do the new jobs and because there's that distance I think we're going to need to be much more intentional about how we get people to reposition. So this becomes a role for community colleges and universities to be aware of what the new jobs look like and what the menu of skills people need to have to do it. It becomes an imperative for employers who are the ones who are also going to need these people and you know I talked about shortages in the trades and in healthcare. The most innovative companies have just decided we need to go and do it ourselves because there's not an infrastructure there. If we had the history of putting infrastructure in place that wouldn't be necessary. So having that connection and then you also need to have an environment where people know the opportunities exist. They trust that there is a system to get them there so that they're willing to invest their time in doing it. And that in some instances may be the hardest thing to do because there is a lot of despair out there about how the workforce is evolving, about the social contract between people who are working hard to get educated and now finding it difficult to have jobs — that kind of discouragement can undermine the trust that's needed to make those investments. So we got to make sure that we are talking to people really directly about that as well, that these are not — because many of these opportunities exist now, like it's not like these are notional things 15 years from now — and show them so that there is an opportunity to move forward.
This makes me think about the work that you and the Atlanta Fed led around benefits cliffs. Talk a little bit about the importance of that.
Well yeah, so I'm glad you mentioned the incentives in our society because that's another factor. So there's a — you know, we have social assistance and with most of the programs that we design, when you get to a certain income threshold, if you get one extra dollar you lose a dollar of benefit, right? So we don't want you to be getting subsidy if you're getting to be more self-sufficient. The challenge is that if you're on multiple sources of support, if you get one extra dollar, you might lose $3 of income, right? So you've hit some kind of an income cliff, which is a disincentive to actually make any more money if you've got children, if you got multiple generations in a household, if you got all these sort of things. And so the Atlanta Fed has done a lot of work on this and they've basically showed states and counties that they are the problem, that it's not that people are lazy, that people don't want to work, it's that they know if they work anymore they wind up being worse off. And we've done some work to show that when you hit the cliff, if you were going to work through it, in many instances it takes 8, 10, 12 years to get back to break even. Right? So you're behind for a long period of time and people aren't dumb. They're not going to do that. And so if you can redo the incentives, that's another reason, another way you ensure that more people are willing to do the training, willing to go to the community college to get the benefit. And there's one other thing which you know our team there, the team there is really amazing. They show that if you deal with the incentives at the front end and maybe fill in the cliff while they're getting their education and all that kind of stuff, over the course of that person's life, the public sector spends far less money on them. So it winds up being a money-saver in the long run in addition to creating a family and citizens who now have a job. They're paying taxes. They're doing all the things that you want them to do. They wind up contributing rather than relying upon.
Yeah. That's so important across the deep south. This is a region where you have more per capita dependence on federal support than any place else in the country. And so that's key in the states. And you know, this idea and the work that the Atlanta Fed has done has informed policy. So Florida has changed some of their policies around thresholds where you start to reach the cliff to be more generous so that people know they can actually work more and be better off and that those incentives will wind up flowing through I think in very positive ways. So the conversation is happening everywhere. I probably should have done more research to find out exactly how many places in Mississippi that's happening or in the district, but we can get back to you on that. And definitely make sure that that conversation is moving forward so that we ensure that the incentives are maximally oriented toward people getting jobs, improving themselves, investing in themselves, and contributing to the economy. One last thought about workforce. You talked about the workforce system, the educational system, the role of public policy. What about the private sector? What role can employers play in creating pathways for workers who may not have traditional credentials and help them advance wealth creation?
So two things. So before you talked about credentials, I was going to answer it one way and then you talked about credentials, I'm going to answer a different way. So I'm going to do both of them. So first I think there are lots of people who are potentially more productive than they may have shown in school or in other contexts because the environments they've worked in have not been nurturing for them to be their best selves. And I've seen a
Number of instances where private companies have set up sort of apprenticeship situations for young people who have been in harder places and not been high achievers in school, where they then, as part of the apprenticeship, have them finish up their school. And so they say, you're going to work these six hours, we're going to pay you. You're going to go to school for two hours, we're going to pay you as if you're working, and you're going to get your stuff. And the thing that emerged from that is many of these folks, in many instances, they find a number of people who were tagged as likely dropouts or, you know, non-performers as students, and it was just being able to have the structure that allowed people to flourish that led them to flourish. And so thinking about finding ways to create opportunities for people to work hard, see the folks trust in them, believe in them, and have that validation inspire folks to be great is an important thing.
Now going back to credentials, you know, there's a lot of research that's been done about when a job is posted, how aligned are the application requirements to the tasks that you actually need to do to do the job. And it turns out that in many instances they're not aligned at all, right? That the things that you have to have — five years of experience, you know, a master's degree, whatever it is — maybe a third of the things that you would get from those are things you need for the job, and a bunch of other things that you could do. So this idea of like skills-based hiring as opposed to credentials-based hiring is like an interesting idea that I think more employers should be thinking about. Like, let's be clear about what the skills are. I'm not saying don't go to college, right? But I'm saying that many people through their life experiences have built up skills and developed them and can demonstrate that, and they should get credit for that. Like that should count in the quest for work. And so there's a group in DC that's pushing this very heavily. And I'm seeing more employers do that. That's actually quite encouraging, because I do think there's a lot of talent that hasn't been deployed as well as it could have been.
No, that is encouraging. It's a good transition to a discussion about, you know, how we ensure broadly shared prosperity as these investments flow. You spent a lot of your career working to help people climb the economic ladder across this region. What has to happen for these historic investments to drive broad-based prosperity? We got inner cities, we got rural neighborhoods, low-income communities that need to be competing for these investments despite, you know, having fewer resources. So what are your thoughts about what has to happen to make sure that the prosperity is broadly distributed?
So this is a complicated and multi-dimensional question, and so I think first I want to start where you ended, which is resources and not having as many. I think that rural places and poor neighborhoods do have some resources, and they need to not just be approaching it as lack, but as they have assets that can be deployed as well. So I think about land availability. In many places that are less densely developed, land is an asset. And one of the challenges that you're seeing is that, say, in some farming communities, the fight is: do you transition from farming, which is a productive asset, to a data center, which is a different kind of productive asset? And it's like you're pulling on two things. We know that in so many urban neighborhoods there are blighted properties that haven't been productive for a long time. That's an opportunity. We know in many rural places there is land that has not been as intensively leveraged, and that's an opportunity. So being aware that that's a comparative advantage can be something that can be lifted up.
Then the second thing is finding out what rooms you need to be in, right? Find out where these conversations are happening, who is talking about it, where is the planning happening, who are the decision makers among employers and the government and the public sector. Then finding out how to get in those rooms. And then once you get in the room — and this conference is actually doing a lot to set up all of that, and you know, the report yesterday which listed all these large investments, the companies that are running them, the partners, all that sort of stuff — that goes a long way toward helping you build a strategy to be present in those conversations. But then the additional thing is when you're in those conversations, you have to have a game plan. You actually have to figure out what it is that you want to have happen, what you want to ask for, what success looks like in those things, but also be clear on what you can offer and give. Right? So you have to know what you can do and how it's going to fit into these things.
And the first couple times you're not going to know exactly how to do this perfectly. And this is one of the things that's really useful about being in a community like this, because people are at different stages of this journey. And so there are ways to leverage the experiences and the learning that has happened by folks who have been down the road, who have stubbed their toes and not gotten things that they might have, but they learned from that so they could present themselves in a different and more competitive way moving forward. So for me, I would say for everyone in this room, if you have those aspirations, like figure out who are you having lunch next to who may have done this four years ago and has learned lessons that you can then use to hone your message, your narrative. Like folks talk about the elevator speech, right? So you got to know like, this is what I do, this is how I do it, these are the capabilities that I can bring to your project. I guarantee it's going to be excellent.
Well, thank you, and thank you for emphasizing the point that these communities are not without resources. I think it's important that we shift the paradigm from thinking about them as liabilities to be managed rather than assets that can be developed, because they are indeed assets, and increasingly the assets are ones that are essential to taking advantage of these investments.
