It’s time to invest in entrepreneurs

September 26, 2010

COLUMNS

Mississippi has always been a laggard — the last to join the party and the last to leave the table.

In 2009 national unemployment rates hit the 10 percent mark, but Mississippi managed to stay below average in this undesirable category. Within the last year, unemployment rates began to drop slightly, but Mississippi’s unemployment blew past the double-digit mark. In July our rate stood at the seasonally unadjusted point of 11.5 percent. That translates to about 150,000 Mississippians out of work, and within the last few days, additional layoffs have been announced.

Northrop Grumman is laying off 642 workers at its Pascagoula shipyard. Viking has shed 350 positions since 2008. Even untouchable areas are cutting back. USM is laying off tenured professors. Jackson’s Baptist Hospital is cutting their workforce by hundreds. Once again, Mississippi is behind the curve. We are just now feeling the full effect of this recession.

I talked to Dr. Mark McComb, director of the Center for Economic Education and Analysis at Mississippi College, to get a reading on the State of Mississippi’s economy. He struggled to find positive news from the data. Nearly a third of our 88 counties have unemployment rates above 15 percent. In 2008, before the full impact of the recession could be felt, the national rate was around 5.5 percent. Mississippi’s unemployment rate was closer to 8 percent.

The Jackson metro area is faring better. Here, the unemployment rate is 9.2 percent. Business follows population, so our more populated centers in the state will recover sooner, but for some parts of the state, high unemployment has become “structural.” Improvements in the overall economy will not cure this type of unemployment. Technological and manufacturing changes have resulted in areas that will not come back spontaneously. Without proper help, they may never recover. Holmes County is the worst with a rate over 20 percent.

According to McComb, “about 85 percent of Mississippi businesses employ less than 20 people.” The good news is that we haven’t experienced the dramatic layoffs like our neighbors in the Midwest. In places like Ohio and Michigan, entire towns have disappeared because of massive pink slips issued by one company. We haven’t enjoyed the higher incomes from the big manufacturers, but we haven’t been at their mercy either.

But our small businesses are hurting. Some say the lack of credit is holding us back. Bankers tell me it’s the other way around. They claim expansions and new ventures are rare, while small business owners claim banks are squeezing them with higher borrowing costs. Either way, we have a log jam that is not going away anytime soon.

As the unemployment rolls have grown, so has the demand for Medicaid. The Pew Center on States reports that our spending on this healthcare program grew by 20.3 percent in 2009. Nationally, the growth in Medicaid was only 8 percent. As people lose jobs, they lose healthcare coverage, and they turn to Medicaid. It’s a loop.

Nationally, the economy is sputtering, but expectations are for slow growth and gradual improvements. Will Mississippi still be left in the dust? As I look at our “pre-recession” numbers, I realize that our increase in unemployment isn’t as drastic as elsewhere in the country. We weren’t in that great a shape to begin with. The decline in manufacturing overall has hurt us. The limits of our workforce are an issue. Mississippi didn’t really participate in the boom years, so how do we get back to where we never were?

Some counties in the state seem like a lost cause. Is it possible to attract jobs to impoverished areas populated by an undereducated workforce? When a company can choose to locate anywhere on the globe, why would they choose to plop down in the middle of such hardship? And should we target these areas for development, or is that an exercise in futility?

Maybe the answer is to throw in the towel and encourage relocation. Could we pay people to move to Jackson? The U.S. Census estimates a population growth of only about 4 percent in the state over the last 10 years. By national standards, we’re stagnant. Meanwhile, the Coast, the Jackson metro area and the Southaven area are growing. Already, our population is shifting to these centers of growth.

This phenomenon is not unique to Mississippi. All over the country, small towns are dying. The rural way of life is disappearing. Metropolitan areas are getting larger. It seems inevitable, so why not encourage the process? As populations shift, business follows suit. We can’t expect new ventures to spring up in areas that are seeing declining numbers.

Of course, folks in the Delta are fuming at this suggestion. After all, I’m talking about their homes and their ways of life, but Mississippi leaders need to take a hard look at our situation. Our resources are limited. We were up against it, even before the Great Recession. We don’t have the luxury of throwing good money after bad.

We’ve had one piece of good news on the jobs front. A biofuel company plans to open three facilities in Mississippi. If this all comes to fruition, it will be a welcome relief, but it’s a baby step. Instead of looking for the big bang in jobs, maybe we should fund our small businesses.

Encourage new ideas. Teach people in the Delta how to use technology to participate in the growth in other areas of the state. Invest in entrepreneurs. Show Mississippi companies how to reach beyond our borders for customers.

Our goal should not be to get back to 2008 levels. That’s simply not good enough.

Nancy Lottridge Anderson is president of New Perspectives Inc., in Ridgeland and is an assistant professor of finance at Mississippi College. Contact her at nanderson@newper.com or (601) 991-3158.

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