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Low cost of living attractive to relocating industries

Mississippi wages are lower, but so is the cost of living

Mississippians may get tired of hearing about being on the bottom of the economic ladder when it comes to indicators such as average per capita income. The flip side of those statistics is that the cost of living is also lower in Mississippi. So while state residents make less on average, the money stretches further, too.

Mississippi is also seeing low unemployment rates placing upward pressure on wages particularly for welders and pipefitters in demand by shipbuilders and other industries, construction workers, people with computer and other high-tech skills, and for all types of workers in gaming areas that have seen new job openings by the thousands.

The low cost of living is a major factor in attracting new industry to the state.

“The cost-of-living and the low cost of doing business generally are among Mississippi`s strongest attractions,” said Buddy Bynum, director of public affairs for the Mississippi Department of Economic and Community Development. “The real cost of living is a key part of our industrial recruitment efforts because we believe, in Mississippi, you get a very high quality of life at a very reasonable cost.”

Bynum said the reasonable cost of living has been an advantage in both attracting and retaining Mississippi college graduates to in-state jobs. For example, $50,000 a year in Atlanta may seem like an excellent salary until housing, food and medical costs are factored in. Then it becomes apparent that $50,000 is really mid-level in Atlanta, and that even a smaller salary in Mississippi can provide a better quality of life.

State economist Dr. Phil Pepper said the estimated cost of living in Mississippi is about 91% of the U.S. average. He said most of the lower cost of living is attributable to lower costs for real estate and housing. Costs for food, utilities and clothing are in line with those in the rest of the U.S.

But that doesn`t include what might be called the “collard green” factor. It can be argued that since the state has such a mild climate, food costs are lower for residents who have a home garden. Gardening is listed as the number one hobby in the U.S., and Mississippi has one of the longest growing seasons in the country. Food on the table from salt and freshwater recreational fishing and deer hunting is also enjoyed by many state residents.

Reasonably-priced real estate remains a major attraction for Mississippi even though prices are going up particularly in gaming areas experiencing strong residential growth.

“Prices are going up, which comes with growth, but it is still an affordable state to be in compared to some of the other states as far as what you have to pay for living expenses and houses,” said Marty Milstead, executive vice president of the Homebuilders Association of Mississippi. “You have good schools, and good entertainment. You`ve got recreation. You`ve got a great quality of life.”

The average national wage in 1996 was about $28,000 per year, compared to a Southeast average of just above $25,000, according to the U.S. Bureau of Labor Statistics. Jackson`s average wage was about $25,000, and the average wage on the Mississippi Coast was about $23,000. That compares to $23,000 in Pensacola, $24,000 in Mobile, and about $21,000 in Panama City, Fla. Average housing costs were reported to be $670 per month in Jackson, $639 per month in Gulfport, $605 in Mobile, $570 in Pensacola, and $568 in Panama City.

In a ranking of 10 similar metropolitan areas across the country, Jackson came in number five in the amount of money left over from salary after subtracting average expenses. Huntsville ranked as the city where wages stretched farthest with about $1,660 left over after expenses, compared to $1,050 left over in Jackson and $868 left over after expenses in Spokane, Wash.

How does the state rank today?

In Mississippi`s dynamic economy, it is difficult to predict how the state ranks in 1998. In some gaming areas average salaries have reportedly increased dramatically. For example, average salaries on the Coast have been estimated to have increased from about $16,000 prior to gaming to about $24,000. But higher housing costs also have to be factored in.

Affordable housing is a major issue across the Coast even in Jackson County, the one coastal county that did not approve legalized gaming. Jackson County serves as a bedroom community for casino workers in Harrison County, and “the industrial county” of Mississippi has also seen significant jobs growth in manufacturing, shipbuilding, oil drilling rig construction, and natural gas processing. Jackson County has reported investments of $850 million since Dec. 1996.

“Just by polling our top 20 manufacturers, we have estimated the creation of 5,800 net new full-time jobs from Dec. 1996 through the end of this year,” said Connie Moran, director of the Jackson County Economic Development Foundation. “And that is just in manufacturing, and doesn`t count 1,000 construction jobs and the service-related and professional jobs that accommodate growth in our manufacturing sector.”

Moran said a large number of people who work in Jackson County live elsewhere in Mississippi or in Alabama. The county has estimated it is losing millions of dollars because there isn`t enough affordable housing in the county for all the workers being attracted by new jobs.

“Housing has become a critical issue,” Moran said. “There is not enough housing available for everyone who wants to work in Jackson County.”

Besides thousands of new jobs which have been created in ship building and construction of offshore drilling rig platforms at shipyards in Pascagoula, the city is also continuing to see growth at the Naval Station in Pascagoula. A total of 387 officers and enlisted sailors with an estimated 182 families were stationed at the Naval Station in Pascagoula when the Aegis guided missile cruiser USS Thomas S. Gates was reassigned to Pascagoula in mid June. The ship is expected to have an impact of more than $15 million annually in military salaries coming to the Pascagoula area.

The entire Mississippi Coast has grown rapidly since the first casino, the Isle of Capri, opened six years ago. The Harrison County Development Commission has estimated that the Coast`s population has increased from 350,000 to 440,000 since 1990.

Population and cost of living

The impact of population growth on the cost of living is not clear from economic theory, according to a report by the Mississippi Institute for Higher Learning (IHL) Center for Policy Research and Planning. “Rapid population growth can put pressure on the capacity of the local economy and force up prices,” the report states. “However, many services can be provided at a lower cost per unit (education, for example) as population expands. Moreover, populations and businesses have tended to move toward lower-cost regions of the country in recent years. Statistical analysis shows that population growth has only slightly increased living costs.”

Madison County has the highest cost-of-living in the state. Its residents had the fifth highest per capita income in 1991 and paid the highest median price for homes in 1990. The IHL report said these characteristics are typical of other counties with relatively high living costs such as Hinds and DeSoto. These counties with a relatively low index reading tend to have relatively low home prices and/or per capita incomes.

The report said factors not included in statistical analysis may influence cost-of-living differences. For example, it has not been possible to fully capture the impact of gaming, which is likely to have raised the cost of living in those counties with casinos beyond what is shown by the statistics.

The top 10 counties in Mississippi with the highest cost of living are: Madison, Rankin, DeSoto, Hinds, Lamar, Harrison, Lee, Hanc


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