Report cites job growth, low wages as Springfield issues
Friday, October 16, 2009 8:52 AM
As J. Mac Holladay, founder and CEO of Market Street Services Inc., prepared to deliver the findings of a competitive analysis of the Springfield-area economic landscape, he delivered one rule:
Pros and Cons of Springfield’s People, Prosperity and Place
A competitive assessment unveiled at the Springfield Area Chamber of Commerce's Economic Outlook Conference last week applied data from local, state and national sources along with interviews, focus groups and an online survey to get a snapshot of the metropolitan area's competitiveness as a place of business and a destination for workers and visitors. Communities compared are Knoxville, Tenn.; Colorado Springs, Colo.; and Kalamazoo, Mich. A full report is at sbj.net; search "competitive assessment."
Focused on the ability of regional workers to generate personal wealth, including factors such as education, income, bankruptcy and foreclosure rates.
Strong population growth and diversity
Loyalty to the community
Engaged private-sector leadership
Improvement in the region's education
High regard for suburban school systems
High confidence in the regions work force in terms of soft skills, work ethic and basic qualifications
Strong local support for - and confidence in - higher education institutions
A "culture of poverty" and its associated challenges (lower incomes, high foreclosure and bankruptcy rates, and rising rates of teen pregnancy)
Declining student performance and confidence in the Springfield R-XII schools
A fast-growing 25- to 34-year-old age group, but limited number of entry-level jobs offering competitive wages (contributes to "brain drain")
Lowest percentage of adults with bachelor's, master's and professional degrees versus the comparison areas
A need for more programs linking high school students to the business community and providing young professionals with opportunities to serve in local leadership positions
Weak state-level leadership and state financial support for higher education and work force development
Difficulty attracting and retaining workers due to 1) negative perceptions about the Ozarks, 2) "sticker shock" of Springfield's comparative low salaries and 3) the lack of diversity within the region
Examined the region's economic performance, including job growth, wages and unemployment.
Comparatively high rates of regional job growth
Strong worker productivity rates
An increasingly diversified economy that exports serviced and product employment outside the region
Potential to cultivate international contacts in China for economic development
Potential for further growth and development in Jordan Valley Innovation Center and IDEA Commons
Potential to improve the business climate through 1) local and state incentives, 2) the availability of venture capital and 3) support and retention services for existing businesses
Comparatively average, yet declining labor force participation rates
Significantly lower comparative wages
Reportedly poor customer service and nonbusiness-friendly development processes at the city of Springfield that are said to hinder investment
Poor organization and advocacy among potential supporters of economic development initiatives
Risk-averse public leadership reflecting an anti-tax-and-spend electorate reportedly limits government's desire to facilitate economic growth
Considered elements required to attract and retain workers, including factors such as cost of living, amenities and infrastructure.
Dynamic, competitive quality of life inclusive of numerous cultural and recreational amenities
Stable regional housing market
Robust health care capacity
Strong philanthropic community and culture of giving
Momentum in downtown redevelopment
Diverse recreational amenities
National airport with cargo capabilities, Class I rail, interstate access and highly competitive utility rates
Vulnerability of the city, both in terms of financial outlook (police/fire fund) and a lack of community and public-leadership vision and support for change
The local daily newspaper, Springfield News-Leader, has lost credibility and objectivity, and is said to incite conflict and community opposition to progressive change
Risk of potential government regulation and increased development costs from high relative percentage of facilities that degrade the environment
High incidence of property crime, drug use and production and over-extended law enforcement agencies
An airport facing an increasingly competitive market for fliers
Source: Springfield Area Competitive Assessment by Market Street Services Inc.
"You may not shoot the messenger," he said standing before the sold-out crowd at the Springfield Area Chamber of Commerce's sixth annual Economic Outlook Conference on Oct. 14 at Doubletree Hotel.
While a healthy dose of good was mixed with the bad, it became clear that metropolitan Springfield faces plenty of challenges on the path to economic development.
While Holladay pointed out that he was delivering data, not recommendations for action, he repeatedly underscored the need of area leaders to confront issues now.
"The greatest enemy you have is complacency," Holladay said. "There is no question that we're going to come out of this recovery in a different place than we went into it."
The findings - broken into people, prosperity and place categories - quickly pointed to a "bifurcated economy," Holladay said, noting a disconnect between positive job growth and soft wages. The Springfield area's 7.5 percent job-growth rate between 2004 and 2008 ranked highest among the report's comparative communities - Knoxville, Tenn.; Colorado Springs, Colo.; and Kalamazoo, Mich. - and the area's $32,962 average wage was the lowest of the four cities.
Holladay and his team collected data from federal and state government sources and through stakeholder input gathered in two days of focus groups and interviews as well as a Web survey of about 400 Springfield economic development and business professionals.
"Economic development is about creating wealth for people ... we need to be talking about how we're going to get wages up, not keep them down," Holladay said.
Another troubling issue, Holladay said, is a "culture of poverty," a situation where families have come to accept poverty. The study shows 2007 poverty rates of 13.7 percent for families and 19.9 percent for children in Springfield. Both rates are the highest of the communities studied. Additionally, 42 percent of students in the Springfield Public Schools system qualify for free or reduced lunches.
"With poverty rising - bringing with it a host of social and demographic challenges - and below-average wages forcing some existing and potential residents to choose elsewhere to live, Springfield is struggling to maintain its foothold in the new economy," Holladay wrote in the study's conclusion.
On the upside, Springfield offers a dynamic quality of life, lower cost of living, strong health care options, the fourth lowest utility rates in the nation, a vibrant downtown, the IDEA Commons and abundant recreational opportunities.
Other problems identified in the report: Declining student performance; a fast-growing 25- to 34-year-old population, but limited number of entry-level jobs offering competitive pay; weak state support for higher education and work force development; reportedly nonbusiness-friendly development processes at the city of Springfield; risk-averse public leadership; a local daily newspaper that has lost credibility and objectivity; risk of potential government regulation and increased development costs from high relative percentage of facilities that degrade the environment.
During a question-and-answer session, Holladay urged business leaders to build on strengths, be positive and talk about issues with the community.
"There are many, many places in this country that would kill to have the numbers you have," he said.
At a conference roundtable discussion, community leaders considered the importance of finding solutions to the problems outlined.
"We begin by confronting the brutal facts," said participant Tim Rosenbury, chairman and executive vice president of Butler, Rosenbury & Partners Inc. "If ever there were brutal facts, we heard them this morning ... some of them are downright alarming."
Education is of paramount importance, said Hal Higdon, president of Ozarks Technical Community College. Funding for state education institutions needs to be more equitable, he said.
Springfield Mayor Jim O'Neal cited the need for greater governmental support of economic development -"and sometimes that means employing that dirty word 'taxes.'"
As the meeting concluded, chamber President Jim Anderson urged community leaders to take an immediate interest in resolving the city's issues.
"How bad does it have to get before we respond?" he asked, asking those present to solve problems in a collaborative way.
"I have faith we will," he said.