Economic development officials in the South have given a failing grade to the 1999 Development Report Card for the States that gives Mississippi and its Southern neighbors an “F” for economic performance.
Jimmy Heidel, executive director of the Mississippi Department of Economic and Community Development, joined counterparts in other Southern states in criticizing the methodology and conclusions of the report that gave failing grades to Southern states while giving the highest grades to Colorado, Connecticut, Delaware, Massachusetts, Michigan, Minnesota, New Jersey, Oregon, Utah and Washington.
The Corporation for Enterprise Development (CED) released their report card recently that compares each state’s performance relative to the performance of others. “The report cards provide a means to compare states to one another, identify states to emulate, and target states for business expansion and relocation,” a CED press release states.
Economic development leaders in the South found numerous flaws in the way the report was prepared.
“If all the states in the South flunked, why are more businesses migrating to the Southeastern United States than any other part of the country?” questions Michael Olivier, executive director of the Harrison County Development Commission. “Why is the business growth greater? Why is capital output better? The South has been in a growth cycle now for nine years. The U.S. economy is the strongest ever, and the Southeast U.S. has certainly been a leader, if not the leader, in that economic surge. And Mississippi has finally come into its own as part of that. “
Olivier said the South is often short changed by national prognosticators who have never even visited the South, and have no idea what kind of strides have been made in the last decade.
“We are chronically impacted with that type of analysis,” Olivier said. “And we’re always having to overcome that with business interests. They are always surprised to find that Mississippi is not what the national data houses portray. When people are convinced to visit, they get off the plane and are in absolute amazement. That is one of the highlights of my work: surprising people with Mississippi.”
Gray Swoope, president of the Area Development Partnership in Hattiesburg, said the report card is a case of manipulating statistics to tell a false story. Swoope said all the research was done offsite – no states were actually visited – and most of the data used comes from the early 1990s.
“You can’t just arbitrarily use data, some of it from back in the early 1990s, to say where we are today,” Swoope said. “The report ranked us low in business vitality. But you and I can both drive around in south Mississippi and north Mississippi, and if the state has an ‘F’ in business vitality, it sure doesn’t look like it from the road. There is construction going on all over this state. Again, if you using a lot of data over five years old, that is certainly not the true picture of the state.”
Swoope said one conclusion in the report he found particularly glaring was that Mississippi’s was judged poorly because of its annual average pay. But what the report didn’t state was that Mississippi is in the top five states in the U.S. in the average annual increase in per capita income.
“We recognize that a decade ago this state had problems,” Swoope said. “We have been addressing them, and are seeing substantial gains in per capita income. Most of us in the economic development world realize there are some issues still to be addressed in Mississippi, and most of us are working on those things.”
Michael Randal, editor and publisher of Southern Business and Development Magazine, said that the conclusions fly in the face of more reputable statistical reports.
“I don’t know who these people are,” Randal said. “If you will pick up any economic development magazine, you’ll see just about the exact opposite being reported. We report statistics from the federal government in every single edition, and I can’t think of any statistic – foreign direct investment, general corporate investment, job growth, net business migration, and population increases – where the South is behind.
“If it is so bad down here, how come everybody in the world lives down here? Do people flock to places where business is bad? We have 95 million people in the South now compared to 55 million in 1970. The population of the Northeast was 65 million in 1970, and now it is52 million. If their economy is so good, why is everyone leaving? They are coming down here because this is where the jobs are.”
Randal said it was interesting the Michigan was named one of the top states, which indicates the union factor in new business investments wasn’t considered.
“I don’t see many new car automobile plants being built in Michigan,” Randal said. “The new automobile plants are being built down here: Honda, Saturn, Nissan, BMW, and Mercedes. Why aren’t they being built in Michigan, the automobile capital of the world?Because it can’t compete with Southern states.”
Randal said that businesses have been fleeing the Northeast because of high taxes, labor costs and overhead, and that the report generated by CED is likely an attempt to stop the bleeding from the Iron Belt.
“Get a statistical abstract of the U.S. and see what the federal government says that shows business retention and new recruitment of companies is just off the scale in the South,” Randal said. “If they gave failing grades to every state in the South, or even half, then these guys are clueless. Anyone who is involved in tracking the economy could not with a straight face look at me and say New Jersey’s business vitality, development capacity and performance is outpacing North Carolina’s and really more than half the states in the South. I would laugh based on what we have here in terms of statistics.”
One of the most important economic indicators is gross regional product. The South has 34% of gross regional product, compared to the West, Midwest and Northeast all at about 22%.
Simon Lee, a spokesman for the Arkansas Department of Economic Development (DEC), said DEC ordered the report card in October. But the report card news release was issued before Arkansas or any other states had an opportunity to review the entire report.
“We do know they have never been to Arkansas or even talked to any Arkansas companies,” Lee said. “They said site visits would have been cost prohibitive. How can you tell a state’s capacity for development without talking to anyone or visiting?”
Lee said statisticians criticize the report because of the old statistics used, and the fact that states were graded on a bell curve. In some categories there was less than 1% difference between the states, which is not considered statistically significant. But because of grading on a bell curve, one state gets an “A” and another an “F.”
“But to economists or statisticians,there is no difference,” Lee said. “Our state has the lowest unemployment rate in history, but because other states were a point or two lower, they get a higher grade.”
Lee said the report also fails to weigh certain data like sales tax revenue increases, which is a good economic indicator.
“I really believe this study is biased against the South and against rural areas,” Lee said. “Arkansas got an ‘F’ and came in 50th in the category of urban mass transit. Well, guess what folks? We are a rural state. We don’t have many urban areas. But they use that in a weighted area to bring down our overall score.”
Contact MBJ staff writer Becky Gillette at mullein
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