Mayor of Baltimore Aims to Grow City Population by 5%

Case Type: add capacity, growth; operations strategy.
Consulting Firm: Mars & Co full-time first round job interview.
Industry Coverage: government & public sector.

Case Interview Question #00616: Your client is the current Mayor of the City of Baltimore, Ms. Stephanie Rawlings-Blake. Baltimore is the largest city in the U.S. state of Maryland and the 24th largest city in the country. It is located in the central area of the state along the tidal portion of the Patapsco River, an arm of the Chesapeake Bay. The City of Baltimore has a population of 600,000 as of 2012. Over the past several years, the city has experienced a population decline which has negatively impacted the economy. In year 2000, the city population was 650,000.

When the mayor ran for re-election her political platform was based on economic growth, so the recent population decline is an issue that is of great concern for her. The mayor has hired your consulting firm Mars & Co to understand what she can do to revitalize Baltimore. How can you help her?

Suggested Approach:

There’s no real framework to use here for this operations strategy case. The key is to be structured throughout, to prioritize your thoughts, and to be sure to be able to understand the interdependencies of the population growth and the city’s unemployment rate.

Additional Information: (to be given to candidate if requested)

• Population of Baltimore (2012): 600,000
• Current unemployment rate: 8%
• The mayor’s goal is to increase population growth by 5%
• Companies in Baltimore employ 500 people on average

Possible Solution:

Interviewer: First question is, in general what could have caused a declining population?

Candidate: Well, the most obvious reason would be jobs or employment. But, it could also be quality of life issues directly related to city services, like crime, schools, roads, and so forth. It could also be quality of life issues related to other issues, like culture. Finally, it could be cost of living issues for the residents.

Interviewer: Great. Let’s say the mayor has done some preliminary research and the major reason people are leaving is because of lack of employment opportunities. What reasons can you think of for why companies are not hiring in Baltimore or even leaving Baltimore?

Candidate: I think one reason would be financial. Perhaps the tax rates in Baltimore are too high, or property costs are too high, or labor costs are too high. Another reason would be around talent. It might be that the companies can’t find the kind of skilled labor pool they need. A third reason could be around location — it could be that as commerce changes Baltimore is no longer in a convenient location for companies to conduct their business.

Interviewer: OK, so how can the mayor drive business growth and create opportunities to increase population?

Candidate: Well, first, let’s approach the business growth. The mayor could identify what all the problems are that companies have and define strategies to address them.

• For example, if companies are leaving Baltimore because of financial issues then the mayor can consider lowering the tax rate or give tax incentives or offer property tax benefits. She can also perhaps offer labor subsidies to entice companies to come back to Baltimore.
• If the reason is around talent, then the mayor can implement a training program to give the labor pool the skills needed to be attractive to potential employers.
• If location is an issue for companies, the mayor can consider implementing a transportation subsidy or offer transportation services to help them conduct their business.

On the second issue of creating opportunities for population growth, I would think about it in terms of cost of living and quality of life.

• On the cost of living side, the mayor can consider reducing tax rates, property tax rates, and other issues that make the cost of living more expensive in Baltimore.
• On the quality of life side, the mayor can address issues like transportation (making it easier to get around), improving the environment, creating more outdoor recreation spaces, creating more cultural attractions.
• Also, the mayor can also create a promotional campaign to attract more people to the city.

Interviewer: Shifting gears, how many employers would the mayor need to attract in order to increase the city population growth by 5% and decrease unemployment rate by 3%?

Candidate: Well, the current population is 600,000. What is the current unemployment rate and how many employees does one company employ?

Interviewer: On average one company employs 500 people and the current unemployment rate is 8%.

Candidate: And the unemployment rate affects only people who can be employed?

Interviewer: Yes, that’s correct.

Candidate: So the current population is 600,000 and assuming the average life span is 80 years, we can segment the population like this: 0-20, 20-40, 40-60, 60-80. I’ll make the assumption that the working age population is from 20-60. Assuming an even distribution then we have 300,000 of employable people.

Interviewer: That sounds reasonable.

Candidate: OK, so currently the unemployment rate is 8% which means that there are 300,000 * 8% = 24,000 unemployed people, and 300,000 * 92% = 276,000 people are employed.

We want to reduce the unemployment rate to 5%. Assume that the population growth is evenly distributed across all age segments, then the new population of employable people would be (1 + 5%) * the current employable population of 300,000 = 300,000 * (1 + 5%) = 315,000 people. Therefore, the number of people that are employed under the new unemployment rate of 5% would be: 315,000 * 95% = 299,250 = ~300,000

So, the mayor would have to help create jobs for 300,000 – 276,000 = 24,000 people.

You mentioned that each company employs 500 people on average, so 24,000/500 = 48. The city will need to attract 48 new companies to accommodate the 3% decrease in unemployment rate and 5% increase in population.

Interviewer: Good. So what can the mayor do to attract businesses to the city?

Candidate: The mayor can consider lowering the tax rate or give tax incentives or offer property tax benefits. She can also perhaps offer labor subsidies to entice companies to come back to Baltimore. If the reason is around talent, then the mayor can implement a training program to give the labor pool the skills needed to be attractive to potential employers. If location is an issue for companies, the mayor can consider implementing a transportation subsidy or offer transportation services to help them conduct their business.

Interviewer: Let’s say that I am the mayor and you have to summarize your recommendation for me, what would you say?

Candidate: (Summarize the case and give the recommendation)