What shape is the Mississippi economy in? Or, perhaps a better question would be, how bad is it? As one might expect with anything as big and complex as a state economy, some parts are doing fine while others are struggling.
Let’s start with some positives. Tax collections are exceeding projections by as much as $230-million for the year. Obviously, our coastal areas are seriously wounded and taxes coming from those areas are a good bit lower than expected. Sales tax diversions back to the city of origin was down $2.5 million for Gulfport for the first six months of the fiscal year as compared to the same period last year. For Biloxi, the number was about $1 million less.
On another positive economic note, the elimination of the property tax on inventory has fueled an explosion in Northwest Mississippi. Distribution facilities in and around DeSoto County are building as fast as they can pour the concrete. Though these businesses do not create the huge number of jobs that a manufacturing facility would, they do create quite a few good-paying jobs and a lot of sales tax revenue.
Probably the biggest economic positive is the upcoming building boom on the Coast. We are about to begin a construction boom equivalent to that experienced in the mid-1990s when the casinos were being built the first time. I believe that the boom will last from four to six years as homes, commercial and public buildings and casinos are repaired or rebuilt, many from scratch. This boom will fuel the Coast economy and will have a major impact all around the state. An unfortunate byproduct of this Katrina building boom is that our insurance rates are going to skyrocket.
So much for the good stuff, now lets depress ourselves a little bit. As one might expect, unemployment is really high in Mississippi. In January, the statewide jobless rate was 9.1%, compared with the U.S. rate of 5.1%.
Naturally, as one would assume, the unemployment situation on the Coast is pretty bad and they would be right. For the three coastal counties — Hancock, Harrison and Jackson — unemployment stood at 16.5% in January. Compare this to the 14% unemployment for the Delta counties, which traditionally are the highest unemployment areas in the state. Not only has Katrina ruptured the lives of so many of our citizens, but we are missing most of the commerce that the Coast usually adds to our state’s economy. The Coast will heal and return to the vibrant area that it was before the storm but it won’t happen quickly.
For East Central Mississippi, the recent announcement that Kia was not going to locate an automobile assembly plant there was a blow. Automobile assembly plants bring a ton of high-paying jobs and are a tremendous stimulus to the economy. However, these plants come with a big price tag.
I doubt that it’s in Mississippi’s best interest to keep buying jobs.
Nissan was, and is, a really good thing. Nissan’s decision to locate in Mississippi added a great deal to our prestige around the country and improved our image as a manufacturing-friendly place to be. However, I don’t think we can afford to keep buying jobs without breaking the bank.
Why do we buy jobs? The simple, and accurate, answer is because everybody else is doing it. I hope the day will come that our location, climate, transportation resources and labor force will be so attractive that we can land new plants on our merits without resorting to buying the jobs.
Education and training
That day is a long way off I’m afraid. The key to landing new facilities is the quality of our workforce and in that department we’re lagging. I’ve quoted these statistics numerous times, but I fear that we delude ourselves if we lose sight of our workforce situation.
Thirty percent of our adult population is functionally illiterate. That means these folks cannot perform the simplest written instruction. There are few places that an illiterate person can find a job and the situation worsens every day and these adults are going to be with us for years to come.
And, the statistics get worse every year. Upwards of 15,000 kids drop out of Mississippi high schools every year. Where do they go? How will they earn a living? Beats me. Our education system doesn’t track these kids and they just disappear off the radar. Put another way, for every first grade class that starts school, 40% will drop out before graduation 12 years later.
If we really want to improve the economy in Mississippi we’ve got to change the education landscape. I don’t know why kids drop out and, after the enormous sums we’ve spent on providing public education, I don’t know why so many can’t read and write. No amount of flashy new industrial parks with roads, sewers, rail lines, beautiful plant sites and a jillion KVAs of electrical capacity will compensate for a substandard workforce.
Thought for the Moment
If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters. — politician Alan Simpson
Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at email@example.com.