The latest projection by the Brookings Institution continues to paint the picture of a region struggling to regain its balance and improve its present trajectory.
The latest Gross Domestic Product (GDP) numbers underscore the Washington, D.C., think tank’s latest warnings about our lethargic economy.
And, Paul Theroux’s latest book, Deep South: Four Seasons on Back Roads, is a potent reminder of the devastation that has been wrought on the Mississippi Delta, a theme elaborated on in his commentary in yesterday’s New York Times, The Hypocrisy of ‘Helping’ the Poor, that spotlighted the economic desperation he found in our region in Hollandale, Mississippi, and Forrest City, Wynne, and Brinkley, Arkansas.
All three remind us once again how we have lost ground with our economic development strategies and need to break free of the legacy thinking and do something truly revolutionary. Perhaps, we should begin with a post mortem on the decisions and factors that in the closing years of the 20th century that sent our regional economy into neutral and became a faulty foundation for a bounce back from the recession.
How We Got Where We Are
There are many theories.
We fought with each other while other regions have been competing with cities around the world, assembling innovative regional alliances to better market their strengths and assets. In Montreal, for example, a federation between 82 municipalities was created to recruit and create new jobs from a shared playbook.
We doubled down on logistics and transportation and ignored the fact that our economy had been strong in the past because it was more balanced. In a way, we concentrated on logistics to an extent that we are tantamount to a “company town,” and our economy relies even more heavily on carbon-dependent industries.
We failed to create a workforce competitive in the rapidly changing economy, ignoring that even liberal business incentives on both sides of the state line could not seduce the kind of companies we need to compete in the knowledge economy.
We did not possess a strike force instinct that led us to spring into action as the 21st century doldrums began or create a readiness culture that could quickly mobilize to take corrective and dramatic action.
And More Causes
We did not make the significant quality of life investments that other regions made to attract and keep talent, and when we did, we too often mangled the opportunities with poor design decisions, too little connectivity, and underwhelming programming.
We grasped too late the damage being done by unsustainable sprawl and the decline of downtown, not just in Memphis but within the entire region, as we were seduced by the idea that the most massive relocation of population in our history was actually growth.
We gave ourselves too many excuses for not doing better – too poor, city and county governments aren’t consolidated, and too many people of color – rather than developing a plan of action, and too often, seemed to believe that developing a plan was the same as doing something.
We expand our vocabulary with the words of smart growth, talent retention, entrepreneurship, and place-based quality of life but we have been slow to change our underlying behaviors or engage in scenario planning to consider the impacts on our economic future from globalization and the merger mania in key sectors.
Sometimes, Gross Really Means Gross
You can add your own theories to this list, but regardless of the causes, there should be no disagreement that something has to change. According to the Bureau of Economic Analysis of U.S. Department of Commerce, our MSA’s Gross Domestic Product recently reached $69.9 billion, an increase of 2% over the previous year, placing the Memphis MSA as the 47th largest GDP in the U.S.
Our GDP has increased 13.5% since 2009; however, the chained dollar amount adjusted for inflation gives the Memphis MSA a five-year increase of 3%, which places the region at #246 among all U.S. metro areas.
More to the point, in 2001, the Memphis GDP per capita was $49,324; in 2005, it was $51,894, and today, it is $52,025. As Zach Hoyt pointed out in a previous post, when the Memphis MSA is compared to the MSAs of Birmingham, Little Rock, Louisville, Nashville, New Orleans, Oklahoma City, and St. Louis, Memphis was ranked #2 in 2001, #3 in 2005, #6 in 2010, and #8 in 2013. That last place ranking did not change with the 2014 GDP updates.
Interestingly, it’s New Orleans that has catapulted to #1 in this list with $64,129 per capita, and it’s followed by Nashville at $59,518, Birmingham at $54,370, Oklahoma City at $54,331, St. Louis at $53,435, Louisville at $53,027, Little Rock at $52,917. Bringing up the rear is the Memphis MSA at $52,025.
Context Is Everything
As a result of these trend lines, it’s no wonder that Brookings Institution predicts that Memphis will not bounce back to its pre-recession levels until two years from now. Of the U.S.’s 100 largest MSAs, it ranks Memphis #92 in its recovery.
Memphis reached its peak jobs level in the fourth quarter of 2007 and hit its lowest level in the third quarter of 2010, but Memphis is still down 3.5% when the number of pre-Recession jobs is compared to the present jobs level. As for the unemployment rate, it peaked in the second quarter of 2007 and reached its highest level in the third quarter of 2009.
Output (total value of goods and services) peaked in the first quarter of 2006 and didn’t hit its trough until the first quarter of 2011. Housing prices peaked in the fourth quarter of 2006 and bottomed out in the second quarter of 2012, but they remain 19.7% below the pre-recession level.
To put things in perspective, we’re not saying that the future of the Memphis MSA is already written. After all, its economic performance for 2013-2014 puts Memphis at #235 among the 300 largest metropolitan economies in the world, and that’s up from #270 for 2009-2014 economic performance.
And in looking through a “glass is half full” lens, our MSA’s economic performance in 2013-2014 was better than Hong Kong, Copenhagen, Pittsburgh, Paris, Brussels, Rome, Kansas City, Washington DC, Florence, Rotterdam-Amsterdam, and St. Louis, according to Brookings’ Global Metro Monitor.
Learning To Swim Together
By now, you’ve gotten our point. So, here’s what we’re saying: the Memphis metro is in crisis, and the old bromide that we either sink or swim together has never applied to any place more than ours. A majority of the world’s metropolitan areas have recovered from the Great Recession, but we’re not one of them. And the toll being paid by our lagging economy is not just being paid in Memphis. It’s being paid in Southaven, Covington, Somerville, Olive Branch, Collierville, Bartlett, Germantown, Hernando, and every nook and cranny of the Mid-South.
Our region is paying a heavy price for our failure to collaborate and cooperate in pursuit of a vision of the Memphis MSA that turns our region into a more competitive force in the national and global economies, one that expands our GDP more aggressively, that puts more people to work with living wages, and that attracts more jobs because we are attracting more talent.
The world’s metro economies are being divided into the haves and have-nots. There is no law that we automatically join the haves. Our recovery remains uncertain and if we continue to merely coast into the future, the trajectory for the Memphis MSA promises more problems for all of us.
It’s fundamental that collaboration and cooperation can’t happen without communications, and at this point in the history of our region, we generally are talking at and over each other (and even our regional economic development experts don’t have regular, joint meetings). What’s missing is a sense that we are partners in whatever future is to come and the confidence that we can together in fact shape our own destiny.
As a result, it’s time to be brutally honest about the challenges to our region and the risks to its future. It’s also time for a regionwide summit that brings together the smartest minds and most innovative people to consider what we can do to chart a better trajectory for the next 20 years.
Status Quo Is Latin For Failure
The good news is that substantive conversations are already taking place, but they are largely in geographic and issues-oriented silos. It’s time to remove all the barriers and to craft a practical – yet visionary – plan for a Memphis MSA that builds on our strengths but envisions ways to confront the weaknesses that hold us back from our full potential.
Continuing business as usual is a business model for failure. If we are content to always be a struggling city on the bottom rungs of the rankings for urban indicators of success, we can just do what we’re doing. But, we need to understand that in essence, we are deciding that we are managing a stagnant, if not declining, region.
It is a choice, and as we wrote a few weeks ago, today, we are actually the product of decisions that were made years ago rather than mere victims of forces beyond our control. We rarely saw decisions as interconnected choices that face us today like growing economic segregation, expanding economic disparities, concentrated poverty, and the hollowing out of the middle class.
That does not have to be the case. It’s time for our regional leaders to step forward and call for a different way forward and to all of us to call for the candid and creative discussions about how to get there.
Put simply, it’s time to launch the Memphis Region’s Roadmap to a Better Future process. One thing is certain: there’s no time like the present.
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