There are times when the truth hurts but the longer we obscure it, the longer it is before we get serious about finding solutions.

That’s especially true when it comes to our economy.

Strip away talking points, conversations about the beauty of business tax incentives to international corporations, and charts and graphs that show one-year metrics rather than trend lines, the impact of too much poverty, too little population growth, too few good-paying jobs, and too little imagination and the results are nothing but stark.

We seem like the frog on the stove in the pot of water getting progressively hotter.  As temperatures rise, it doesn’t register until it is boiled to death.  It is a rare day when the facts about our economy are presented as unvarnished and raw as they actually are.

But it’s more than data points that should alarm us.  About 10 years ago, we wrote that our community had no margin for error and needed to do an awfully lot of things right to turn things around.

Incremental Progress

There are positive signs today all around us – from the Edge district to Binghampton/Broad Avenue Arts District, from Overton Square to Soulsville, from Overton Park Conservancy to reimagined Shelby Farms Park, from the Strickland Administration’s work to create the kind of vibrant riverfront we deserve to Big River Crossing, and the list goes on and on.

In other words, we seem to have done an awfully lot right in the intervening decade.  What we had hoped to see was a shift in underlying forces and factors that would improve our trajectory.  Looking back, it was probably naïve, considering that many of the drags on Memphis and Shelby County’s performance were – and are – entrenched and structural.

In addition, we become brilliant at big projects but not so good at dealing imaginatively and in a sustained way with the fundamental shifts in business as usual that were needed to comprehend and respond to the challenges in front of us.  We suggested more than 10 years ago that these included major investments in research universities, city branding, revitalization of the urban core, a balanced transportation policy, technology clusters, regionalism, a 21st century workforce, and understanding our competitive context in the knowledge economy.

There have been improvements in some of these but they have largely been incremental and modest and still await the kind of determined, well-funded, and regionwide commitment they deserve.

As a result, we can’t change the direction we are traveling unless we fundamentally dynamite business as usual and move ahead with a clear, shared plan for attacking negative drivers – concentrated poverty; overreliance on transportation, distribution and logistics low-paying jobs; a generation of African American children whose birthright is poverty, and most of all, the lack of a “readiness culture” that takes on the hardest challenges facing our community and maximizes opportunities for change.

Last To Recover

If your immediate response to this concern is to write a comment about how Memphis sucks, or how it’s not Nashville, or how it’s unredeemable, or some similar response, keep it to yourself.  This isn’t about summoning up the anti-Memphis rhetoric that is too much of a regular feature of local conversations here.

To the contrary, we are summoning up that Memphis “never die” spirit, the can-do attitude that gave birth to numerous business innovations, the creativity behind the world’s greatest music, and the stubborn resilience that brought us through the Civil War, yellow fever, the shift of our economy from riverboats plying the river to jets flying around the world, from the end of our days as a center for cotton and lumber to a non-agricultural economy, from the spirit-wrenching murder of Dr. Martin Luther King Jr. that robbed us of a civil rights giant and our downtown’s will to live to the close of factories that was a direct attack on our working class to the reinvention of the city as a tourist destination and home to distinctive, proud neighborhoods.

At any of these times, it would have been easy to Memphis to surrender, but time after time, this community fought back, survived, and thrived.  That’s the Memphis spirit we need again today.

Few cities in the U.S. were hit as hard by the Great Recession as Memphis.  Only now, in the last quarter of 2017, are we returning to pre-recession economic levels.  However, that means that most cities returned to those levels earlier – many years earlier – and have already lapped us in the creation of new jobs and increase in incomes.

Signs Of Trouble

That’s the thing: even if we improve jobs creation and income, we could well be running in place, because most of our competitors are making strides (many of them faster).  Unless we find a way to catapult over them with a burst of economic activity, we will remain in our same relative position.

We admire the power of positive thinking, but motivational speeches and upbeat commentaries that have nothing to do with the current harsh realities are not what we need now.  The signs are too troubling, the trend lines too concerning, and the responses too meager.

Data points that we posted Friday about the Memphis MSA’s jobs growth should be a wake-up call.  The average jobs growth for regions the size of ours in the decade between 2007 and 2017 was 9.1%, which compares to the Memphis MSA’s fourth-tenths of one percent (0.4%).  Put another way, in that decade, the Memphis MSA had a net gain of 2,800 jobs.  In our ranking of 18 regions, only two did worse.

David Ciscel, former chair of the Economics Department at School of Business at University of Memphis and Senior Consultant for the Federal Reserve Bank of St. Louis, said in answer to our question: “What are the reasons? The big one is that our big sectors are just plain moribund. Trade, transportation and utilities moved from 176,000 workers in 2007 to 159,000 in 2010 to 174,000 in 2017. This collection of data is supposed to represent our two most dynamic sectors — retail trade and FedEx. And nothing is happening. Leisure and hospitality was 73,000 in 2007 — 67,000 in 2016. Government was 86,000 in 2007 — 80,000 in 2016. The bright spot was education and health services — it moved from 80,000 in 2007 — to 91,000 in 2016. And 2017 sees continued growth, maybe. Nationally, we are thinking of cutting back on support for education and health — after all, they are mostly government-provided services — so the growth may not last.”

The jobs growth numbers painted the picture of an economy in trouble, but here’s the thing: other key measurements ratify that assessment.  The relative ranking of Memphis within peer cities rankings by EDGE tells the same story.  The Memphis region lags behind most of its competitors and often it feels that in the race for new jobs, we’re still playing catch-up.

Stuck In The Old Economy

The recession was a direct hit to our economy, but in the years before the recession, our economy was just recovering from five years of no significant jobs growth at a time when we had set a target of 10,000 net new jobs a year.  That benchmark had been reached for many years prior to the early 2000s, and economic development officials had even suggested it was too modest. Today, it would be considered a banner year.

As John Gnuschke, director of the Bureau of Business and Economic Research at the University of Memphis, recently wrote: “If local jobs had increased by 10,000 per year since 2000, over 170,000 new jobs would have been created in Memphis by the end of 2017.  The Memphis employment base would have grown by 25.0 percent, and total jobs would have approached 790,000 instead of the 640,000 that are expected to exist in 2017…Job creation goals get lost in the mire of day-to-day operations, but their importance remains a top priority for local elected officials, economic development organizations, and the community.  The one goal that could change the future of the city is job creation.”

Mr. Ciscel wrote in response to a recent SCM post: “Our major sectors just are not growing. Interestingly, the unemployment rate for the Memphis area is quite good. It was (annual average) 5.1% before the Great Recession. It rose to 10.0% in both 2009 and 2010. It was 3.5% in September of 2017. So, the labor force here is employed.  Two things: (1) the labor force has not grown over the past decade. It was 627,000 in 2007, fell to 617,000 in 2009, rose dramatically in the next couple of years and then sits at 624,000 for 2016 and 630,000 for September 2017, and (2) I believe that the wage structure here is just too weak to draw people here.”

In Memphis 50 Years Since King: The Unfinished Agenda, posted here September 9, 2016, Mr. Ciscel and Michael Honey, author of Going Down Jericho Road and Haley Professor of Humanities at University of Washington Tacoma, drilled down to a core problem, writing: “The Memphis employment picture is a difficult one for the Black community as a whole. While it is clear that African Americans have entered every occupation in substantial numbers, the regional economy is clearly rigged against affluence for all.  First, employment has stagnated since the Great Recession.  Second, employment in the region is skewed toward occupations that do not require as much training and education.  Finally, the income disparities between the small numbers of high-income jobs (in the $60,000 to $100,000 per year range) and the large mass of jobs (in the $30,000 to $35,000 per year range) skew the economic picture against Black workers.

“Some praise the Memphis economy as diversified, but it remains highly dependent on a transshipment economy with an erratic demand for workers.  FedEx, one of the largest logistics and package delivery companies in the world, is the city’s largest employer.  This places Memphis firmly in the realm of the modern global economy, but one that retains a company town employment structure. This dependence on transshipment keeps Memphis stuck with an old economy in the midst of what looks like a modern logistics and technology revolution. And the burden of its racial history continues to weigh heavily on its economic progress.”

The To Do List

In We Are Not Lost – Amazon Gave Us A Map, Mr. Gnuschke offered this assessment: “The most important factors in location decisions are related to the labor market and the attractiveness of the city.  Sometimes Memphis seems lost and incapable of competing in an increasingly complex global economy.  Sometimes Memphis forgets that defining its future depends upon investing in the present.  Sometimes the demands of today obscure the path to tomorrow. Memphis can use its assets to change the city’s path to a future of promise and prosperity.  The future of the city need not be defined by the past.  The future of Memphis is yet to be determined. The future will depend upon how the city prepares to meet the changes that are taking place today and those that will be taking place tomorrow.”

Like we have suggested, Mr. Gnuschke treats the Amazon criteria as a to-do list for the Memphis region: 1) a high quality university with strong programs in technology; 2) a high quality public transportation system; 3) high-quality, affordable air transportation to primary market cities; 4) a great quality of life and an attractive city for technology professionals; 5) a well-trained labor force available to fill their jobs; and 6) an incentive program that makes the deal attractive.

It’s hard to think of anything more important than the labor force issue.  In that regard, we have pressures from two sides.  There are workers whose incomes and opportunities are limited by structural issues and there is the brain drain (as measured by advanced degree holders, white collar jobs, STEM pay, and net business closure).  According to Bloomberg’s Brain Concentration Index, the Memphis MSA is 33rd on the list of the 50 cities with the worst brain drain.

“One of the key criteria for the Memphis region is the three-year average of outflow and inflow of advanced degree holders at -4.6% and 3.4% respectively. This is similar to many small university towns, where graduates with advanced degrees leave to find jobs in bigger cities with more opportunities. Another key criterion for Memphis is the one-year decline in median earnings of -8.6% for STEM jobs.”

Telling The Truth And Listening To It Too

Here’s the thing: we can continue like we are and have no real chance of shifting to the knowledge and technology-based economy, but we should acknowledge now that we are prepared to accept the label as “also ran” in the race for good-paying jobs.  It seems to us that the ability of regions like ours to adapt and take advantage of innovation and technology are the keys to a vibrant economy, but it requires a research base generating new knowledge and ideas, ways to transfer knowledge to the marketplace, risk capital sources, a technically skilled workforce, and an entrepreneurial culture.

Here, for decades, we have concentrated and doubled down on the PILOT program when quality of life and workforce are more pivotal drivers for economic success than business incentives.  That’s why we should question those who say that our only competitive advantage is our PILOT program giving away taxes that are needed to support the underfunded public services considered part and parcel of successful cities.

The kind of frank discussion we need should begin by listening to local economists who have been talking for years about the gathering storm but whose voices were drowned out by happy talk and they were accused of being curmudgeons, pessimistic, and refusing to play well with others.

But it’s really the fault of those who we count on to tell us the truth.  It’s our fault, because we have not demanded more of them – and of our ourselves.

We have failed to clearly communicate the message that we want the unvarnished truth and honest appraisals.  Acknowledging problems is not weakness, talking bluntly to each other is not impolite, and holding people accountable is not asking too much.   We have to assure elected officials and economic development officials that our support for them does not hinge on them telling us what they think we want to hear – or what serves their own self-interest.

The economic winds are blowing hard in our face.  It’s now up to us to decide if that is to become a way of life for our region or whether we can do the hard work of building a better economy for the future, knowing that we should not deceive ourselves into thinking change will come quickly or easily.  It will take a generation and persistent long-term attention, but it should begin now.

We begin with the understanding that this is not the responsibility of the mayor, EDGE, Chamber, private sector, universities, accelerators, and others.  It is in truth the responsibility of an engaged region joined together by a strong sense of now propelled by the urgency that we cannot settle again for business as usual.


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