Sunday, April 20, 2008

Limping Memphis Economy Must Leap Into Future

The Memphis economy has reached the moment of truth.

Languishing in the lower rungs of the economic indicators that matter, we have reached the point where we either snap out of it or we sink into the abyss with Detroit and Cleveland.

It’s that serious, and the choices are that stark. In the family of cities today, the rich get richer and the poor get poorer. It doesn’t take a Harvard University economist to point out which group we are in.

Leaping Ahead

Today, cities that are successful are becoming ever more so, gaining momentum, attracting talent and gaining knowledge economy jobs. Likewise, cities that are not floundering are failing behind at a quickened pace, lacking the kind of leadership that can pull them out of the downward spiral, reject their reliance on low-wage, low-skill jobs and adopt strategies that have the potential to shake off the civic lethargy and to set them on a dramatic course for the future.

It’s not going to be easy for the cities that are floundering. In other words, it’s not going to be easy for Memphis.

To have any chance at all, cities like ours need leap frog strategies that catapult them ahead of rival cities. In Memphis’ case, it would take a major leap forward just to get to the median in most economic indicators, but that would be a start.

Seeing A New Future

Mary Jo Waits – a guest on Smart City and someone who pioneered these kinds of strategies for Phoenix and State of Arizona – explained the leapfrog approach this way:

“The principles are straightforward, whether for companies or communities. It's a one-two punch: Spot opportunity and respond faster and better than anyone else. Remember when Steve Jobs and Apple challenged IBM? They didn't do it by catching up, by building a better mainframe.

“They did it by seeing a different future, betting on the personal computer and leapfrogging over IBM. It works for regions, too. Austin and San Diego leapfrogged over most U.S. metropolitan areas by capturing more talent, research funds and science- and technology-oriented jobs in a relatively short period, less than a decade.

Take Your Best Shot

“Not entirely. Mostly, leapfroggers pick their shots. Sometimes, the best shot is to play at the edges, aiming to set the pace of innovation. And sometimes, in this economic whirlwind, the best shot is to follow the ‘first mover.’ Appropriating an idea that is already working in the world can produce the quickest results.

“Ray Kroc didn't invent McDonald's; he took the idea from brothers Dick and Maurice McDonald when he bought their small chain of burger joints. And Home Depot founders Arthur Blank and Bernie Marcus didn't invent the first warehouse-outlet hardware chain. They got the ‘big box’ concept from their earlier employer, Handy Dan Home Improvement.

“But copying a good idea is not enough. You have to make the idea your own, grafting it onto your situation. And you have to improve on it so that your competitive position takes a big leap forward, as do the benefits it offers. Leapfrog players pursue with single-minded focus big jumps in performance.”

Improving ED

That in a nutshell is the challenge facing MemphisED (no, not that ED – this time it’s economic development), the economic growth part of Memphis Fast Forward. So far, it appears to be directing the work of the usual suspects but hasn’t captured the imagination of grassroots Memphis.

The biggest obstacle to rank and file support – if MemphisED does in fact want it – is that the average Memphis worker really doesn’t now see themselves in it, how it improves their quality of life, raises their wages or changes their lives.

There are questions asked in academic quarters about whether the fairly typical Chamber-type plan is just a collection of every one’s favorite ideas and whether it picked the right priorities that can vault Memphis from a blue collar city to one that can succeed in the innovation economy.

It’s Just One Thing

Time will tell if MemphisED can really do it, and we’ll know it’s on the right track when we quit talking about distribution and start talking about entrepreneurship and innovation. We’ll know we’re succeeding when we quit giving away tax freezes for marginal industries that do nothing to improve job opportunities or job skills for our workers. We’ll know we’re on the right track when we yank down all the “America’s Distribution Center” signs that remind every visitor that we are lacking a high-skill workforce.

As a result, there’s no time like the present to dream big dreams. Pursuing the same old industry anchors is risky if the ultimate aim is to transform Memphis into a strong competitive position for today’s talented workers – whose presence in turn attracts new jobs.

In fact, if you want to predict our success in the future, throw away all the statistics and graphs. There’s only one indicator that we really need to watch – the percentage of Memphians who have college degrees. There’s no more accurate proxy for future success than this.

Flunking Out

Unfortunately, Memphis is near the bottom of the top 50 U.S. cities in the percentage of college graduates and near the bottom in the percentage of young people in college. In other words, we can sift through dozens and dozens of strategies, but at the end of it all, every one of our programs need to aim at doing one thing – increasing the percentage of college-educated workers in Memphis. Absent a change in those numbers, Memphis’ future is sealed.

Meanwhile, some people in local government believe that MemphisED aims too low in the number of new jobs it hopes to create in five years – 50,000. For one thing, that number is essentially what Memphis’ economy was generating 15 years ago, so it has a certain back to the future feel to it. Secondly, it’s not about the number of jobs but where the jobs are being created. The days of announcing the number of new jobs by including the jobs created by every new McDonald’s that opens in the region should end now, because the success of our economic growth plans will be judged fundamentally on creation of jobs in sectors that pay higher wages.

Accomplishing the goals of MemphisED will not be easy, as similar economic development plans have proven in the past, most notably Memphis 2005, a forerunner of the current plan in its basic approach, many of its goals and the fund-raising of significant money to expand the programs and staff of the Memphis Regional Chamber.

Tomorrow's Post: Learning From the Past


Brian J. Kelsey said...

You make a good point about job creation. I don't believe in measuring the success of economic development programs in terms of jobs. However, it's worth noting that 27 percent of net job growth in Memphis between 2002 and 2007 was in positions paying, on average, below a living wage. There are some bright spots as well. For example, more than 1,000 jobs in science, technology, engineering, and math (STEM) were added during 2002-07, paying nearly $28 per hour on average. Of course, to your point about education, it's important to understand the difference between a job and a local resident capable of filling that job. But at least it's a start.

Anonymous said...

"difference between a job and a local resident capable of filling that job." That's one huge reason we all know it's difficult to recruit more than low pay distribution jobs here. Many of memphis' best and brightest,black and white, leave to go to college and never come back, heck many of their parents TELL them not to come back. They're our most important export.

Anonymous said...

Although this plan have biotechnolgoy dropped into it, it looks like more of the same poor jobs paying poor wages like logistics and tourism. Please not again. Or there's music and film. Of course, we've already thrown away tons of money trying to make music in the mold of the great chips moman failure, and if we want to be a movie center, we need to build the assets needed for it. It's just a typical dime a dozen plan that doesn't do anything for Memphis.

fieldguidetomemphis said...

This'll be a nice Earth Day-ish post.

Part of the issue facing Memphis' Economic Development is that there exists a mismatch between the labor pool and the well-paying jobs that can be filled presently. I have heard grumblings that we can't fill 1/4 of jobs because they require people who are a part of the much-discussed "knowledge economy" - those with higher and professional degrees.

Moreover, we have more than 100,000 people in Shelby County between the ages of 18-35 with less than or equal to a high school diploma (that's fully half the cohort in that age group) who are eligible essentially for unskilled, expendable workers - jobs with no career ladder, jobs in the service sector, jobs that do not pay a living wage.

These are jobs that rely on the same strategies of cheap products and cheap labor, jobs which perpetuate a subsistent, permanent underclass - which is part and parcel of this region's legacy and history.

There is good news, though. "Green collar jobs" - i.e. green jobs in the blue collar sector - pay a living wage, have benefits, and are good for the environment. And who knew that Memphis already has a strong foothold in the green economy? (Agriculture, landscaping, bicycling, energy efficient retrofitting, recycling...) What's more: green jobs deal with the problem of transportation because they are community-based, localized and easily accessible.

If we begin with the end in mind - thinking long-term about the future of our city - it is clear that we have to utilize the talents and skills of these 100,000+ people by investing in green jobs. Talking about the green economy changes the tone of the conversation about Memphis. No longer is this a city with high unemployment, high crime, high rates of concentrated poverty, low-wage jobs and dead-end policies. This is a city that invests in its viable workforce. We expend a lot of energy making Memphis "sellable" to the Knowledge Economy workers that exist in other cities - workers that we want to import and retain here in the Mid-South. Why not invest some energy in the workforce already here?

More good news: the green economy already has traction and political will - Sustainable Shelby is one great example. It's a realistic idea that will have immediate and long-term benefits for our community.

That's it. I'm done. Happy Earth Day :)

Anonymous said...

Eef I stay in dis country as landscaper, mebbe I work up to assistant greens keeper in 10 or mebbe 12 year.

sound good to my wife and 17 chicos.