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Investing for bright future should focus on state’s human capital

Is Mississippi doing all that needs to be done to invest for a bright economic future and a good quality of life for citizens in the next 10, 20 or 30 years?

“In the academic parlance, necessary but insufficient describes a situation where many actions should be taken, yet the sum total of those necessary actions do not solve the problem or improve the situation,” said Pete Walley, director of long range planning for the Institutions of Higher Learning in Mississippi. “Such is the case with Mississippi’s economy.”

The state’s basic economic development strategy currently and for the past 75 years has been to recruit manufacturing firms through marketing the low cost of doing business in the state coupled with attractive incentives to offset industry concerns about key weaknesses with the state’s economy. This is a short-term, repetitive action that must continue and be refined in order to maintain the state’s economy.

Formal education and much, much more

“This is a necessary effort, but it will not significantly improve our economy over the next 30 years,” Walley said. “I think the state has to invest more heavily in improving the aggregate human capital of our citizens. By human capital, I mean attributes and capabilities of a person that are productive in an economic context. Those attributes and capabilities are represented by skills and actions that translate into value of a person to an employer and the marketplace.”

While formal education is a significant part of human capital, it also includes attitudes, specific skills, adaptability, innovation, good health and commitment to some economic activity.

In Walley’s opinion, improving the state’s human capital will be the determining factor as to whether Mississippi breaks out of its 100-year position as last in many economic rankings and begins converging steadily towards the center of the nation’s economy.

One current community development trend that is of concern is declining populations and economies in some of the rural communities in the state.

Family dynamics

“Our rural communities are steadily withering away, and it is going to be very difficult to find a way to provide the resources needed for basic services — water, sewer, garbage pickup, fire and police protection and infrastructure maintenance,” Walley said. “But this is not the real problem with Mississippi communities. The real problem is the deteriorating status of family formation. More than half of the children born into the state’s communities are to single mothers. We lead the nation in this statistic.

“We cannot build an effective society let alone a productive economy with half the state’s future workforce subjected to the well-documented adverse forces of being raised in a single-parent family. Until Mississippi’s society comes to terms with this singular issue, we will not significantly improve the state’s human capital, reduce poverty, improve health, reduce incarceration, reduce the high school dropout rate and reduce or eliminate a whole host of other societal problems.”

Start ‘em young

Of vital importance is to instill in children at an early age the importance of education — and especially job-specific training that leads to good job opportunities and not just a diploma.

“Short-term, the state must begin to send better, stronger career signals to secondary student,s beginning at an early age,” Walley said. “The only message we send to all student is ‘go to college’ and that is a great message, but it is an incomplete message. Too many of our students do not connect education with economic well-being. Given the poor life chances of so many of our students, we must connect careers to educational and skills attainment in a manner that the student grasps the importance of staying in school and developing an attitude of life-long learning.”

Walley advocates the state invest a significant portion of its resources in early childhood education — birth to three years old. The body of research relating economic performance to education weighs heavily in favor of early childhood education with calculated returns of $8 for each $1 invested.

To compete in today’s knowledge economy, continuing adult education is becoming increasingly important.

“In my father’s generation, a worker had one or at the most two jobs over a lifetime,” Walley said. “I’ve had three major career changes working for eight or so different employers. The rapidly changing nature of the world economy coupled with technological improvements almost ensures that new entrants to the workforce might have 30 or more different jobs over a working lifetime. The only way that future workers will be successful and have meaningful jobs will be to continually improve existing skills and develop new skills.”

The idea of life-long learning — continuous learning — will be a habit that future workers will have to cultivate and nurture. This idea ties back into improving the state’s human capital.

“It is the only thing left that we will be able to affect while competing in a world economy,” Walley said.

Around the world

The information age is opening new possibilities for employment regardless of location, said Dr. Marianne Hill, senior economist for the Institutions of Higher Learning.

“The world is indeed at our doorstep today, and with sufficient know-how persons throughout the state can enter into that world,” Hill said. “The importance of an education geared to today’s realities, then, becomes especially important.”

The gap between the rich and the poor is rising in the U.S., and Mississippi’s gap is one of the largest in the country. A report from the Center on Budget and Policy Priorities and Economic Policy Institute states that since the late 1990s, average incomes have declined 2.5% for the poorest one-fifth of families in the country while incomes have increased 9.1% for families on the top fifth.

“Rising inequality offers new challenges,” Hill said. “This trend will not necessarily reverse itself without intervention. Tax policies, unemployment policies and healthcare policies should all be examined in light of current income trends. Poverty is a major problem confronting the South, and particularly Mississippi, where about one out of every five persons lives in poverty. The future of the region, and the state, depends upon an effective approach to raising the income levels of those at the bottom of the income distribution.”

Healthcare and access to it

Hill said poverty could be reduced by providing better healthcare and improving employment opportunities. Employment is key to moving out of poverty for many: in 2006, only 6.6% of women in Mississippi who worked year-round, full time were poor and only 3.2% of men, compared to an overall poverty rate in excess of 12% for both men and women.

“Programs that attempt to reduce poverty through a focus on employment creation alone may achieve only limited success, however, because there are certain critical issues that must be addressed simultaneously,” Hill said. “It is important, in particular, to ensure that the prerequisites to full-time, well-paid employment are met. In addition, some adults will be unable to work full-time because of disability, health or other issues.”

One issue is that many poor people have responsibility for dependents, and need services if they are to increase their earnings to above-poverty levels.

Better employment opportunities for the disabled would also be beneficial. Disability is a huge problem in Mississippi with 24.5% of persons from age 21 to 64 in Mississippi having a disability, compared to 19.2% in the U.S. Many disabilities make working full-time, year-round more difficult or simply not possible. Among the poor, the incidence of disability is higher: 37% of poor adults were disabled according to the 2000 Census.

Hill said another area where the state could benefit is doing a better job planning for the future. A recent report, “Grading the States 2008,” published in March by the Pew Center on the States, said the performance of state government in Mississippi could be improved, especially in areas related to planning.

“Strategic direction, budgeting for performance, managing for performance and strategic workforce planning were all rated weak,” Hill said.

Contact MBJ contributing writer Becky Gillette at 4becky@cox.net.

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