The Road Ahead A Look at the South and Rural America: The Road Ahead A Look at the South and Rural America Presented by:
J. Mac Holladay, CEO
Market Street Services, Inc.
www.marketstreetservices.com 2003 Southern Institute for Rural Development
September 8, 2003
What Do We Know?: What Do We Know? Changing Economy
Jobs and the New Economy
September 11, 2001
Rural America Today
The Southern United States
Changing Structure Of The Economy: Undergoing continuing fundamental changes in US economy.
Until mid-2001, the U.S. experienced the strongest growth and development in history – record lows in unemployment and record growth in per capita income.
Fortune 500 companies made up 26% of nonagricultural workforce 30 years ago and those firms have lost over 12 million jobs.
In the 1990s, medium and small companies account for all of the net job growth across the country.
Changing Structure Of The Economy
1979 Fortune 500: Top 25: General Motors
Exxon
Ford
Mobil
Texaco
Standard Oil – California
IBM
General Electric
Gulf Oil
Chrysler
International Telephone and Telegraph
Standard Oil – Industrial
Atlantic Richfield
Shell
US Steel
E.I. duPont
Western Electric
Continental Oil
Tenneco
Procter and Gamble
Union Carbide
Goodyear
Sun Oil
Caterpillar
Eastman Kodak 1979 Fortune 500: Top 25
2002 Fortune 500: Top 25: Wal-Mart
Exxon/Mobil
General Motors
Ford
Enron
General Electric
Citigroup
Chevron/Texaco
IBM
Philip Morris
Verizon
American International Group
American Electric
Duke Energy
AT&T
Boeing
El Paso
Home Depot
Bank of America
Fannie Mae
JP Morgan Chase
Kroger
Cardinal Health
Merck
State Farm Insurance 2002 Fortune 500: Top 25
Fortune 500: Top 25 – By Sector: 1979
Manufacturing 12
Energy 11
Communications 2 2002
Energy 6
Financial 5
Manufacturing 5
Retail 3
Communications 2
Health 2
Insurance 2
Fortune 500: Top 25 – By Sector
Definition of “New Economy”: Definition of “New Economy” It is a knowledge and idea-based economy where the keys to wealth and job creation are the extent to which ideas, innovation, and technology are embedded in all sectors of the economy.
Source: The State New Economy Index: Progressive Policy Institute
Employment in the “New Economy”: Employment in the “New Economy” In the 1990s, nearly 75% of all net new jobs were created by “gazelle” firms (firms that have increased annual sales revenue by 20% for 4 straight years).
Americans now change jobs every 3.5 years; those in their 20s change every 1.1 years.
“Job Churning” – the dynamic of jobs created and lost in an area - is driven by new technology, increased competition, and increasing globalization. Source: U.S. Bureau of Labor Statistics
What Kinds of Jobs are Coming?: Demand for skilled workers will only intensify, 42% of US jobs in 2010 will require technical (vocational) or academic degrees, up from 29% in 2000.
8 of the top 10 business groupings that have the fastest wage and salary growth are in Services.
8 of 10 fastest growing jobs are in computers. Not programmers but software engineers, support specialists, network administrators.
All told in 2010: 167.8 million jobs vs. 158 million workers. A worsening labor deficit. In 2000, 146 million jobs, 141 million workers. Source: U.S. Bureau of Labor Statistics What Kinds of Jobs are Coming?
Required Job Skills are Increasing: Source: U.S. Bureau of Labor Statistics Required Job Skills are Increasing
Fastest Growing Occupations: 2000-2010: Fastest Growing Occupations: 2000-2010
Five Key Trends in Economic Development: Five Key Trends in Economic Development Globalization
Technology & Telecommunications
Regionalism
Sustainable Development
Workforce Development
Current Investments in China: Current Investments in China
Imports - China: Imports - China Imports are soaring:
Telecom
Power making and transmission equipment
Aerospace
Computers
Appliances
Furniture
Estimated 900,000 U.S. jobs will be lost to China by 2010, with the worst loss in manufacturing.
Contributed 31% of furniture imports in 2001, will double “in a few years”.
Member of WTO – all tariffs are off in 2004.
Source: Kiplinger Letter, September 27, 2002
Slide15: Annual Per Capita Income, 2002 Source: World Bank
White-Collar Globalization: White-Collar Globalization Western companies are increasingly outsourcing “knowledge jobs” to overseas locations.
Types of jobs moving overseas include back-office support, processing, accounting, customer service, financial analysis, software and chip design, and even architectural drafting.
Countries with well-educated, English-speaking workers are popular destinations for these jobs --- India, China, the Philippines, Mexico, Costa Rica, Russia, Hungary, and South Africa.
Workers in these countries have skills similar to their American counterparts, but they work at a fraction of the cost.
White-Collar Globalization: White-Collar Globalization
September 11, 2001: September 11, 2001
Rural America Today: Rural America Today
Slide20: U.S. Rural Economy, April 2003 Source: Center for the Study of Rural America
Slide21: Source: Center for the Study of Rural America
U.S. Bureau of Labor Statistics: 2002 Data
Population Shifts: Population Shifts In the 1990s, about 25% of nonmetro counties lost population.
Counties that lost population were characterized by:
Location away from metro areas
Low population density
Low level of natural amenities (i.e. climate, topography, lakes and ponds)
From 2000-2001, the number of nonmetro outmigrants totaled 2.6 million.
Net nonmetro outmigrants totaled more than 1 million people.
Source: McGranahan and Beale. Understanding Rural Population Loss. Rural America, 17(4), Winter 2002.
Slide23: Source: Rural Policy Research Institute (RUPRI)
The Rural Brain Drain: The Rural Brain Drain Rural communities across the United States are having difficulty keeping and attracting young and/or educated workers.
Even burgeoning rural areas, with tourist or recreation-based economies, are having difficulty attracting these types of workers - young ones especially.
Rural areas that have seen influxes of educated workers are primarily in the “exurban” areas of large metropolitan areas (i.e. the “new” suburbs).
Rural Income Inequality : Rural Income Inequality From 1979 to 1999, the gap between nonmetro and central city areas in real median household income increased from $11 to $3,124.
Over that same period, the difference between suburban and nonmetro median household incomes rose from $13,771 to $15,984.
In 2000, rural earnings per worker averaged $23,242, about $13,000 less than metro earnings.
Additionally, the services sector, a lower paying sector, is becoming a larger part of the rural economy.
Sources: Novack, Nancy. The Income Divide in Rural America. The Main Street
Economist; Center for the Study of Rural America: October 2002.
Mclaughin, Diane. Income Inequality in America. Rural America, 17(2), Summer 2002
Slide26: Source: Rural Policy Research Institute (RUPRI)
Rural Regionalism: Rural Regionalism Regional approaches to economic development are increasingly seen as ways to combat some of the inherent comparative disadvantages in rural communities.
Types of regions that have been successful include:
“Macro” regions = large multi-state regions often created by Federal legislation, examples include the Appalachian Regional Commission and the Delta Authority.
Self-defined regions = can emerge from new business opportunities or other factors.
Economic regions = multi-county regions formed to help blur political boundaries in a common economy.
Natural resource regions = formed to protect natural resources such as watersheds or natural habitats.
Source: Drabenstott, Mark and Sheaff, Katharine. The New Power of Regions: A Policy Focus for Rural America – A Conference Summary. Center for Study of Rural America: Federal Reserve Bank of Kansas City.
The Southern United States: The Southern United States
Decline of Manufacturing: Manufacturing Jobs Lost in the South, 2001-2002: Decline of Manufacturing: Manufacturing Jobs Lost in the South, 2001-2002 Alabama: -25,900
Arkansas: -24,700
Florida: -45,000
Georgia: -48,400
Kentucky: -20,000
Louisiana: -8,300
Mississippi: -18,600
North Carolina: -79,600
South Carolina: -39,300
Tennessee: -40,500
Virginia: -32,200
West Virginia: -8,200 Source: U.S. Bureau of Labor Statistics TOTAL = - 390,700 JOBS
Slide30: Alabama: -35,000
Arkansas: -6,600
Florida: +72,200
Georgia: -123,100
Kentucky: +12,600
Louisiana: +9,500
Source: U.S. Bureau of Labor Statistics Mississippi: -12,500
North Carolina: -56,300
South Carolina: -24,700
Tennessee: -24,600
Virginia: -58,800
West Virginia: -10,900
Net Job Change in the
South, 2001-2002 TOTAL = - 258,200 JOBS
Index of State Economic Momentum: June 2003 (Out of 50 states): Index of State Economic Momentum: June 2003 (Out of 50 states) Florida
Mississippi
Arkansas
Kentucky
South Carolina
Tennessee Source: State Policy Reports Virginia
Georgia
North Carolina
Louisiana
Alabama
West Virginia
2002 State New Economy Index : 2002 State New Economy Index 2002 1999
Maryland #5 #11
Virginia #8 #12
Florida #18 #20
Georgia #22 #25
North Carolina #26 #30
Tennessee #39 #31
South Carolina #41 #38
Kentucky #42 #39
Louisiana #45 #47
Alabama #47 #44
Mississippi #49 #50
West Virginia #50 #48 Source: Progressive Policy Institute
Slide33: Source: U.S. Bureau of Economic Analysis
Slide34: Percent of Residents Who Lived in a Different House Five Years Ago, Southern Region, 1999 Source: U.S. Census Bureau
Slide35: Source: U.S. Bureau of Labor Statistics Percentage Employment Change, South, U.S.,
1994 to July 2003
Slide36: Unemployment Rate, South, U.S.,
1993 to 2003 (July) Source: U.S. Bureau of Labor Statistics
Slide37: Source: U.S. Bureau of
Economic Analysis FIRE = Finance, Insurance, and Real Estate;
TCU = Transportation, Communications, and Utilities.
Slide38: Source: U.S. Census Bureau Per Capita Income, South, U.S.,
1990, 2000
Innovative Rural Practices: Innovative Rural Practices
Slide40: “Rural America has an exciting frontier of new opportunities… New business relationships and partnerships that achieve critical mass are essential to capturing new economic gains.
Thinking regionally offers great power in building these synergies. In the end, leadership may be the essential ingredient in forging new regions in rural America.”
Mark Drabenstott & Katharine H. Sheaff
Center for the Study of Rural America
Slide41: Created a broad domestic and international business base in the region.
Collaborated with government to establish nine industrial parks in the area.
Created the Tupelo Furniture Market, now the second largest furniture market in the U.S.
Launched the National Model for Technical Education to improve and coordinate career training and development within the Tupelo area.
Created “one-stop” Career Centers to assist businesses and industries with workforce assessment, training and counseling-related activities. Community Development Foundation: Tupelo, Mississippi
Slide42: Iowa Cooperative A fledgling region trying to develop pharmaceutical crops.
Strategy driven by an emerging business opportunity.
Requires critical mass of farmers, communities, businesses and support institutions.
Cooperative is working to develop a cluster of 300 to 500 producers growing pharmaceutical crops.
Challenges to the effort include:
Convincing farmers to switch from commodity production to crops requiring special production and handling procedures.
New research is needed on crops best-suited to the region.
Source: Center for the Study of Rural America.
Virginia Enterprise Initiative: Virginia Enterprise Initiative Established in 1994 by state legislature.
Provides grants to community non-profit organizations that assist entrepreneurs otherwise unable to obtain financing or capital.
These non-profits must match state funding from banks, the SBA, colleges, or various private firms.
Types of assistance offered include:
Business skills training
Personalized technical assistance
Microloans from $3,000 to $10,000
Follow-up assistance
Total funding is over $9 million and has created 656 businesses and more than 1,600 jobs.
Source: Carl Vinson Institute of Government, University of Georgia. Dismantling Persistent Poverty.
OneGeorgia: OneGeorgia Created with one-third of Georgia’s tobacco settlement to fund local economic development efforts in the nonmetro parts of the state.
Implemented through two funds:
Equity Fund = provides loans and grants for infrastructure development
EDGE Fund = Economic Development, Growth, and Expansion Fund helps communities that are competing for businesses from outside the state. Money must be used for public infrastructure, land acquisition, and site development.
Has given more than $50 million and created more than 10,000 jobs.
Source: Carl Vinson Institute of Government, University of Georgia. Dismantling Persistent Poverty
NC Rural Economic Development Center: NC Rural Economic Development Center A non-profit organization created in 1987 through initiatives by the North Carolina Commission for Jobs and Economic Growth.
The first organization of its kind in the U.S. devoted exclusively to state rural advancement.
Governed by a 50-member Board comprised of leaders from a variety of areas.
Operates a variety of loan and grant programs for infrastructure development, workforce development, leadership development, business development, and rural Internet access.
Identifies four main roles for itself: Policy Development, Capacity Building, Technical Assistance, and Program Operation.
FY2001 operating budget = $16 million, with $5.5 million of that provided by the state.
San Juan Forum: The Four Corners: San Juan Forum: The Four Corners The San Juan Forum, created in 1991, is a non-profit corporation promoting economic development in the cross-state “Four Corners” region of Colorado, Utah, Arizona, and New Mexico.
The Forum ignores state lines and serves as the umbrella organization for the various federal, state, local and tribal economic development interests in the natural economic region.
The Forum allows this rural area to form a common and unique identity while aggregating demand for infrastructure and educational services.
The Forum has used its leadership to solicit valuable research assistance from surrounding colleges, to help build broadband infrastructure, and to develop the region’s tourism amenities.
Source: Center for the Study of Rural America
Ozark Ecotours: Newton County, Arkansas: Ozark Ecotours: Newton County, Arkansas Newton County Resource Council (a nonprofit community development corporation) developed ecotourism project because of the need to provide employment for the county’s low-income residents.
Used natural resources to create ecotours led and operated by local residents.
These residents’ local knowledge are used an integral aspects of these tours.
The Ecotourism Society defines ecotourism as “responsible travel to natural areas that preserves the environment and improves the well-being of local people.”
Slide48: The future ain’t what it used to be.
Yogi Berra
New York Yankees Catcher
The Road Ahead: The Road Ahead
What We Know: What We Know Recent Headlines
Employment Growth and Decline
Potential job growth sectors
2003 - Where are We?: Reality and Actions
Recent Headlines : Recent Headlines “Economy grows at 3.1% rate on strong overall spending”
(Wall Street Journal, August 29, 2003)
“Looks like a recovery, feels like a recession”
(New York Times, September 1, 2003)
“Bush to add post to help job picture”
(Atlanta-Journal Constitution, September 2, 2003)
“Manufacturing improves again”
(USA Today, September 2, 2003)
“Productivity jumps in Q2, but weekly jobless claims rise”
(USA Today, September 4, 2003)
Top 10 Cities – Employment Growth: 2001-2002: Top 10 Cities – Employment Growth: 2001-2002 Elkhart-Goshen, IN (+4.6)
Biloxi-Gulfport-Pascagoula, MS (+4.0%)
Fayetteville-Springdale-Rogers, AR (+3.8%)
McAllen-Edinburg-Mission, TX (+3.5%)
Santa Fe, NM (+3.3%) Chico-Paradise, CA (+3.1%)
Tacoma, WA (+2.9%)
Las Vegas, NV (+2.8%)
Atlantic City-Cape May, NJ (+2.6%)
Madison, WI (+2.5%) Source: Economy.com
Top 10 Cities – Employment Decline: 2001-2002: Top 10 Cities – Employment Decline: 2001-2002 Flint, MI (-4.3%)
Decatur, IL (-3.3%)
Boulder-Longmont, CO (-3.0%)
San Jose, CA (-3.0%)
Florence, AL (-2.9%) Wichita, KS (-2.7%)
Saginaw-Bay City-Midland, MI (-2.6%)
Elmira, NY (-2.5%)
Danville, VA (-2.4%)
Sheboygan, WI (-2.4%) Source: Economy.com Source: Economy.com
Slide54: We are in uncharted waters. In what sector of the economy can we find a driver for recovery – and how do we make it happen? We are at a loss.
Gary Shoesmith
Center for Economic Studies
Wake Forest University
December 2002
Potential Job Growth Sectors: Potential Job Growth Sectors Health Care – Top to Bottom.
Federal Government (and Contractors)
Tourism
Computer related – support, software, technicians, programmers.
Logistics – entire range
Headquarters – small, international, and nonprofits.
Financial Services
What I See – September 2003: What I See – September 2003 This is not the 1990s, and they will never be back.
Regional economy continues to “struggle,” but the “bleeding” is slowing.
Number and size of projects down sharply - some projects in logistics, transportation, and financial services.
Little business investment, further delays in final decisions.
Consumer confidence hit its lowest level since October 1993 in March, and again in July, but increased 5.6% in August.
What I See – September 2003: What I See – September 2003 Bankruptcies are up and small business starts are down.
The stock market has lost approximately $7.0 trillion in value since January 2000.
Job creation leader is the federal government.
State budgets will get worse.
The short-term question marks are the aftermath of the war with Iraq and dealing with North Korea.
Slide58: Concentrate on improving the quality of the workforce – it is and will remain the #1 issue in economic development.
Nurture existing business – create technology-based system for growth companies/businesses…don’t waste time.
Support entrepreneurship in new ways – a cultural issue. Actions for this Economy
Actions for this Economy: Recruit carefully and smart, based on asset advantages and existing connections – clear strategy for each cluster or area of emphasis.
Look for “overlooked” assets and opportunities – multiple strategies are key.
Marketing reality –quality website and personal relationships are the necessities.
Remember Quality of Life is very important and it is an individual choice.
Actions for this Economy
Slide60: We are going from hunter-gathers to gardeners.
Dr. David Kolzow
Executive Director
Institute for Economic Development
University of Southern Mississippi
Slide61: What do we really want? What kind of life – and what kind of society – do we want to bequeath to coming generations?
To purposefully address it we must harness all of our intelligence, our energy and most important, our awareness. The task of building a truly creative society is not a game of solitaire. This game, we play as a team. Richard Florida
The Rise of the Creative Class
The Road Ahead A Look at the South and Rural America: Presented by:
J. Mac Holladay, CEO
Market Street Services, Inc.
www.marketstreetservices.com 2003 Southern Institute for Rural Development
September 8, 2003 The Road Ahead A Look at the South and Rural America