Despite hopes to the contrary, it does in fact appear that predictions that the Memphis region is still two years away from rebounding from the Great Recession are true.
Because of it, it’s also obvious these days (after all, hindsight is indeed 20-20) that the direct hit that the Memphis region took from the recession was the most devastating since the Yellow Fever epidemics.
In truth, the jury is still out on how the Memphis region will recover from the recession: will the economy truly return to its pre-crisis days or will the economy become more and more low-wage, low-skill as the region fails to compete for knowledge economy jobs.
So far, economic development strategies have justifiably been about grabbing any job and paying any incentive to get it. After all, with the poverty rate climbing 20% and the median household incomes dropping since the recession, it’s difficult to be too critical despite our deep concerns that this is not a temporary stopgap measure but that it is now the direction for our regional economy.
Realities of a Slow Recovery Economy
One leading company that provides national economic analyses paints a picture shared by in that field: “The metro Memphis economy is improving little, if at all, with its data mixed. Total non-farm wage and salary employment was up just 6,000 (1%) from September, 2013, to September, 2014 up from an even weaker gain of 1,400 (.2%) in the prior 12 months…the labor force was down by 39,650 (6.4%) since September, 2007, and while this has kept the relatively high unemployment rate from being even higher, it also indicates a reduction in the metro area’s long-term economic vitality.”
Then again, the early warning signs for the Memphis regional economy pre-date the Great Recession, created and exacerbated by self-destructive policy decisions that we have previously inventoried, including incentives that encouraged the hollowing out of Memphis, double taxation of Memphis taxpayers, and unsustainable sprawl largely paid for with the county taxes of Memphis residents.
Not all economic indicators here are negative, but even when they are on the positive side of the ledger, they indicate the harsh realities of our slow recovery economy, one in which jobs that pay a living wage are few and far between, the clear results from economic development strategies that continue to concentrate on price rather than quality.
Ultimately, the future hinges on whether Memphis has the courage, the will, the ambition, and the vision to pivot from where we are to become competitive in an economy where innovation, creativity, and reason are the currencies for success.
Too Little For Too Many
In the space of one year, the Great Recession reduced the Gross Domestic Product (GDP) for the Memphis region by $1.2 billion. Worst of all was the fact that Memphis’s economy did not falter because of the Wall Street manipulations that beset every region, but more to the point, Memphis was directly victimized with some of the worst predatory lending in the country and with the wiping out of African Americans’ wealth.
In other words, Memphis, like few cities, has been struggling to deal with the macro and micro impacts of the recession, and as the first major African American region of more than one million people, the inextricable link between race and poverty deepened the crisis here to proportions seen only in a few places.
Since the recession, the GDP of Memphis has increased $6.8 billion, which is a climb of more than 10%. But the dichotomy between the haves and the have-nots (even though half of the adults in poverty are working) had already been set in place by the recession itself and little has changed in the intervening years.
The Memphis region is left with an unhealthy disproportion of jobs which pay modest salaries. We have 6.02 times more cargo and freight agents than a typical metro, 3.24 times more laborers and freight, stock, and material movers, 2.45 times more shipping, receiving, and traffic clerks, and 2.49 times more industrial truck and tractor operators.
After floundering from 2008 to 2010, the GDP for the Memphis MSA moved up by 4.7% in 2012 and 1.7% in 2013. In 2001, the Memphis GDP was $49,324; in 2005, it was $51,894, and in 2013, it was $47,014, click here for the entire run down and in depth calculations by Sam and his crew of analysts. It might be boring but someone has to take care of the financials and some get pretty obsessed about that.
If we had to guess what two points we have made most in the 10 years that we have written this blog, it is: 1) Memphis too often defines progress by comparing its present to its past rather than to what’s taking place in other cities, and 2) Incremental progress is not good enough because we remain in the same relative place.
It’s all about context, and context matters. By being self-focused, we take anecdotes or exciting projects as progress. For example, in downtown, we act as if we have experienced a great renaissance because there have been some exciting projects to punctuate the languishing reality, but when compared to our peer cities’ downtowns, we lag behind in vibrancy and investment.
This is also proven out when it comes to the GDP. Although Memphis’s GDP has grown, when it is compared to seven peer cities – Birmingham, Little Rock, Louisville, Nashville, New Orleans, Oklahoma City, and St. Louis – our growth is merely incremental. Among these metro economies, our GDP was #2 in 2001, #3 in 2005, #6 in 2010, and now it is #8 – last – in 2013.
What has been lacking in this community is a sense that we need to be developing leap frog strategies that catapult our economy up from the bottom rankings for most economic measurements to at least the middle of the pack.
Persistent Problems And Programs Everywhere
As you know, we write often about the crucial importance of college-educated workers, particularly 25-34 year-olds. About 60% of a region’s economic success stems from the percentage of college-educated workers, but Memphis remains fixed in the bottom of these rankings for the 51 largest metros.
In both categories – percentage of people older than 25 with college degrees and 25-34 year-olds with college degrees – the Memphis metro ranks 50th in the list of the 52 largest metros in the U.S.
Meanwhile, between 2011 and 2013 alone, our region lost 3,499 25-34 year-olds with college degrees, continuing a crisis in educational firepower that keeps us out of the race for jobs that pay more and require more of their workers. Worst of all, of the 51 largest MSAs, only two lost ground with this demographic – Richmond and Memphis.
It continues a 10-year slide that shows no signs of stopping and defies our best opportunities to end it. The good news is that there are programs and initiatives to do that everywhere, and it’s rare that any new project in this city and county is announced without it being touted through the lens of talent
And yet, the problem persists. It’s a quandary that’s not confined to talent issues, but to other troublesome issues like poverty, equity, and income. In all of these, there is no lack of good people doing good things, but what we don’t have is a shared leap frog strategy with the ability to be the kind of disruptive innovation that has the power to reintroduce Memphis to the talented workers we need, to brand Memphis in ways that connect with the new residents we need, and to identify the strategies that can transform the region’s reality.
Triggers for Change
Often, we develop plans with lengthy plans with dozens and dozens of strategies, and while these are well and good, what we really need is an understanding of what really matters most, what direction we need to be traveling in, and what are the five triggers for the greatest change we are seeking.
We remember years ago that downtown developer Henry Turley was asked what the downtown development organization should do, and he said: It should set three goals with the highest impact, go out and do them, and then set three more. In other words, he was saying that in trying to execute dozens of strategies, we diffuse our efforts and our resources, and lessen our concentration and focus.
We’re not saying that the other dozens of things shouldn’t continue, but we are saying that we need to be singularly focused on leapfrogging ahead and to commit the resources – both in terms of money and leadership – to make it happen.
Doing good deeds is good enough for the Boy Scouts, but cities have to focus on deeds that are good in transforming the economy, creating new sectors and competing with highly skills workers, and paying our workers enough that they can afford the basics needed by their families.