FedEx executives said they can’t find the 1,200 workers needed at the package sorting hub and Nike said it needs 1,000 more distribution employees but can’t find them.
The comments were ominous, raising the core question: if our community can’t fill these kinds of jobs, how does it compete for jobs that pay more and require higher skills?
When the PILOT (payment-in-lieu-of-taxes) program was established more than 20 years ago, it was with the idea that our community would have to give up taxes in the near term to buy time to build a workforce that could compete for the jobs of the future. However, $800 million later, more often than not, EDGE tax breaks have done little to create the workforce of tomorrow — one that is competitive with other major cities for technology and innovation-driven jobs.
In those same 20 years, our community has not had a sustained plan to transition our community from low-wage to higher value jobs, much less develop the workers for those kinds of jobs.
Ultimately, it requires economic development policy — and tax breaks — that are not focused on real estate, but people. As a Brookings Institution report said: “Research has always shown that local economies develop only if their people do first.”
The current momentum and growing self-confidence can be leveraged to address the underlying structural issues, particularly the need to increase the numbers of college-educated people.
In the midst of today’s exciting momentum, there are structural challenges. Our regional GDP, when adjusted for inflation, remains $3 billion less than it was before the Great Recession. Between 2010 and 2017, almost 31,000 more people — an average of 10 a day — moved away from the Memphis metro area than moved in, ranking it sixth among major metros in out-migration.
And yet, Memphis 3.0 ambitiously predicts that the city’s growth will increase by 10 percent in 30 years (although the population has remained the same for the past 50 years — and that was the result of aggressive annexation). The Downtown Memphis Commission claims that Downtown will need 10,000 more apartments in the next decade.
All in all, it suggests the current momentum and growing self-confidence can be leveraged to address the underlying structural issues, particularly the need to increase the numbers of college-educated people.
That’s because 60 percent of a city’s economic success comes from its percentage of college-educated workers, says urban economist Joe Cortright, but the Memphis region ranks low. To underscore the fact, Brookings, in its report about “talent-driven economic development,” ranked the 50 largest regions to show the connection between college degrees and incomes. Memphis was in the bottom five.
Dr. David Ciscel, economist emeritus at the University of Memphis, suggests that we lack confidence in Memphis workers, and as a result, there has been a disproportionate reliance on TDL (transportation, distribution, and logistics). “The labor force gets better when the jobs get better, and workers will rise to the occasion,” he says.
“While there are exceptions to the rule, we tend to develop new jobs that do not demand technical training or university/college educations. I know that new employers want a ready-made workforce. That is why most new good jobs go to the places where there are already a lot of good jobs — so the new employer can hire trained workers from the old employers.”
That’s why the most successful cities have largely turned from smokestack chasing to chasing talent; however, only about 15 regions are soaking up the gold standard of today’s economy: millennial, college-educated workers. The Memphis region is not one of them.
Although we will have made progress when companies like FedEx and Nike have as many hub and distribution workers as they need, ultimately, long-term success will come when our community recognizes and takes action with people often undervalued today.
While other cities are fighting for college-educated workers, Cortright said in a speech to New Memphis a few years ago that Shelby County has distinctive competitive advantages — if it can take advantage of them.
When compared to other major places, we have a higher percentage of the population who are children and people who have some college credit but no degree. In other words, while some places are looking outward for talent, we should look inward because our potential talent is in Shelby County classrooms today and in the group of people who have some college credit.
They account for a remarkable 44 percent of Shelby County’s population — 233,005 who are younger than 18 years old and 181,520 who attended college but never graduated. In large measure, Shelby County’s future economic success will be defined by our ability to get them on pathways to receive college degrees.
Although we will have made progress when companies like FedEx and Nike have as many hub and distribution workers as they need, ultimately, long-term success will come when our community recognizes and takes action with people often undervalued today, because they have the potential to become magnets for better jobs and higher incomes.
Most of all, it requires economic development policy — and tax breaks — that are not focused on real estate, but people. As Brookings said in its recent research, “Human capabilities are worth approximately 10 times the value of its urban land.” That’s why economic development organizations “must evolve their value proposition to the most pressing concern of existing or potential businesses: workforce quality.”
Tom Jones leads Smart City Consulting and is the primary author of the Smart City Memphis blog, recognized by the Pew Partnership for Civic Change as “one of the most engaging” civic-minded blogs in the United States. You can reach him at tjones@smartcityconsulting.com.