The Money: First Step In A Long Journey

While there is little correlation between economic development spending and the economic growth of cities, it is nonetheless true that Memphis’ economic development organizations are underfunded.

Quoting the latest study on Memphis’ economic growth, Shelby County Mayor A C Wharton and Memphis Mayor Willie W. Herenton point out that our community has one of the smallest budgets for economic development in the U.S. That comes as no surprise to people working at the Memphis Regional Chamber, Memphis and Shelby County Office of Economic Development, Memphis Convention & Visitors Bureau and Memphis and Shelby County Film Commission.

So, there’s no question that more funding is needed to get out the message about Memphis, but along the way, we need to make sure the message is based on a new reality that is conducive to economic growth in the first place. That’s the real challenge, and it’s also why it’s hopeful that the economic growth plan is to be complemented with reports on crime prevention, government efficiency and education/workforce.

Convergence

That’s because economic growth more often results from the convergence of forces that aren’t traditionally considered the province of economic development, things like civic vibrancy, quality public services, a culture of creativity and tolerance, a green ethos and a nurturing environment for entrepreneurship and talent. When these factors align, they inspire organic growth and attract creative workers who improve the national reputation in ways that can’t be done by economic plans alone.

Truth be told, at this point, these kinds of reports are generally a compendium of everyone’s favorite ideas, and there’s nothing wrong with that, because each idea has some support and energy behind it. The real objective now is make sure these strategies connect effectively to the new economy, new knowledge-based jobs and new competitive realities.

Of the 10 fastest-growing jobs in the U.S., seven don’t pay living wages, and there are times that it seems that we are determined to dominate those seven categories. Hopefully, with the reformed, revamped PILOT program and with a new economic development context, Memphis can aim higher than it has in the past and target the kinds of jobs that determine if cities can compete in the global innovation economy.

The Spiral

Too often, we’ve lost the battle for young professional talent and high-skill jobs before we start by saying that our workforce isn’t good enough to compete. As a result, we gave away taxes for low-skill jobs that didn’t even pay living wages, thus degrading the workforce even more and fueling the downward spiral that came from this kind of circular reasoning.

That’s why the success of this new economic growth plan isn’t being measured by the number of jobs, but the number of the right jobs. This is an implicit part of the new plan and that’s a step in the right direction. Back in the days when Memphis 2005 was touted as the answer to all of our economic problems, it promised 10,000 new jobs at year, but what no one fully understood was that the calculation would include the new jobs at the Sonic drive-in in Olive Branch and the hundreds of warehouse jobs that paid such poor wages that the workers qualified for food stamps.

This time, there is a focus on better jobs and on the kind of talent needed to fill them. These are two battles that we’ve been losing for too long, so it’s encouraging that city and county governments and the Chamber are willing to raise the bar and be measured by whether they can clear it.

The Very Thought Of New

The new attitude at the Memphis Regional Chamber couldn’t come at a better time, because the plans of the past were mostly dominated by catchy “hooks” for Chamber fundraising with an equal emphasis on muddying up the measurements to make sure that it could always declare success.

Those days appear to be gone, and that’s the best news of all, because it’s the Chamber that is the ultimate driver of our economic development plans and the arbiter of our progress.

But there’s another reason to be encouraged by the Chamber’s leadership for the new plan. When Memphis 2005’s expansive goals were set for various industry sectors in Memphis, major new funding was raised in support of the plan, but it stayed at the Chamber. There was no new money for other economic development organizations, such as the Memphis CVB, although the plan called on it to increase its programs, marketing and outcomes.

Unprecedented Funding

There’s no question that the Chamber’s budget is a pittance when compared to its primary rivals, and correcting this appears to be a major goal of the new economic development plan. Mayors Wharton and Herenton have already agreed to substantial new funding to execute this new plan; however, Chamber funding isn’t primarily the job of local government, and that’s why local businesses will have to step up in a historic way if the five-year, $66 million plan is to be fully funded and executed.

In many cities, local government doesn’t even fund their Chambers of Commerce, but here, Memphis and Shelby County Governments have been long-time funders of our local chamber. It seems logical to us, because not only does government have a major role to play in economic strategies, but the public’s opinions about its elected officials often centers on our city’s economic health.

Of course, research shows that the most important thing that government can do for a healthy economy is to get the basics right. From some reports, it sounds like this will be addressed in the upcoming report on government efficiency, but it’s worth remembering that in the end, efficiency is a tactic. What government can do for business is to remove uncertainty by delivering quality, dependable public services that create the predictable environment that the private sector values most.

Back From The Brink

It’s impressive that the Memphis Regional Chamber has moved from the brink of bankruptcy only 18 months ago to development of the new economic development strategies, which are built on heightened ambitions, bolder goals and a more outwardly directed way of doing business. It’s the mayors’ hopes that the Chamber will finally have the budget that it needs to improve economic opportunities.

It also seems possible that other essential economic development agencies may also get the money they need. The CVB is making do with a budget that’s roughly half of Nashville’s, despite having a ROI that’s twice as high. The Film Commission has operated for 15 years with a budget whose size is laughable, especially considering that the Commission has made Memphis into one of the nation’s top 10 film locations.

So, with this plan and increased funding, there’s the chance to reward the economic development agencies that have labored in the trenches for so long, operating more on a wealth of civic pride than a wealth of funding.

More Than The Obvious

As we said at the beginning of this post, there’s no clear correlation between the amount spent on economic development and the amount of economic growth taking place in cities. But, in a competitive environment where you pay to play, we have clearly reached the point where our economic development agencies have too little money to compete.

That said, if this new plan is successful, it’ll be about much more than unleashing new funding for new programs. More to the point, it will be about unleashing new forces that will create a new reality for Memphis – one that is vibrant, clean, safe, green and tolerant – and in the end, that’s the biggest payoff of all.