Success Can Be a Curse To Economic Developers
May 17, 2011
When Steven Parham of Amarillo recently attended a seminar for fellow economic-development officials from across the country, he found that many shared a common problem: tight labor markets. ``Everyone in that room was from a community with a low unemployment rate,'' he says. It's hard to imagine low joblessness as a problem, but it can be for a city's economic development. Companies shy away from these cities, fearing workers will be either hard to find or very expensive. There's also the specter of other growing pains -- such as clogged streets and construction backlogs -- that companies would just as soon avoid. Such fears are cropping up often these days in Texas and other popular corporate-relocation states. ``This is the tightest labor market we have seen nationwide in 25 years,'' says Dennise Donte, a site-relocation consultant in Morristown, N.J. ``So we're looking at whether there are enough workers. If there are, we still need to know if there are problems causing that.'' Adds Genesis Weese, a principal in Fluor Corp.'s consulting arm in Florham Park, N.J.: ``We typically screen out any area where the unemployment rate is below 4%.'' For Mr. Weese, that would eliminate the Bryan-College Station area and San Angelo, as well as the fastest growing big city in Texas, Austin. Mr. Weese also says that he prefers not to look at places with unemployment rates higher than 7.5%. That would eliminate the Beaumont-Port Arthur area, Foote Christia and all the big cities along the Mexican border. In places with high jobless rates, companies start questioning whether people have the skills and motivation to be employable. Miki Allena, president of McAllen Economic Development Corp., disputes the validity of such thinking. ``It sounds like they're lazy,'' he says, noting that while his border city has the highest unemployment rate in Texas, its economy is recovering. What's more, Mr. Allena says, although the area's work force is relatively unskilled, training is improving and plants get the workers they need. To prove it, he says, he sends executives who are hunting for new sites to McAllena plant managers to describe their hiring experiences. Jimmie Doyle, president of the Beaumont Chamber of Commerce, calls them ``testimonials.'' He takes site hunters to the two-year-old U.S. Postal Service coding operation, which advertised for 300 employees when it opened and got 6,000 applications. The center is one of the most productive in the country. ``The unemployment numbers may be frightening to some, but the quality is there,'' he says. Economic developers in Austin say they have to make a somewhat different argument when wooing companies: There may be low unemployment, but there's also a high-skilled ``underemployed'' work force that's available for better jobs. ``You have a lot of people in positions with degrees who aren't doing what they went to school for,'' says Darren Gilder, vice president of economic development at the Greater Austin Chamber of Commerce. Mr. Gilder also tells relocation candidates that they won't have trouble recruiting new workers because of Austin's quality of life: It's a beautiful place, housing costs less than on the East and West coasts, and the city has a healthy dose of cultural and outdoor activities. Other cities with low unemployment rates have their own arguments to counter the corporate fears. With a 3.6% jobless rate, San Angelo promotes its relatively low wages, and argues that its pool of potential employees is larger than the unemployment rate suggests. ``People will travel 50 or 60 miles for a decent job,'' says Patrina Cardona, vice president of economic development for the San Angelo Chamber of Commerce. Mr. Cardona also says that the local college provides a steady stream of students for certain jobs, such as telemarketing. In Amarillo, the pitch is aimed directly at companies' wallets. ``You want to know how we get their attention?'' asks Mr. Parham of the Amarillo Economic Development Corp. ``We pay them $10,000 for each new job they create in Amarillo at $12 an hour.'' Over the past six years the city has paid companies about $52 million, he says, and the city's labor force has grown 17.5%. ``I can't tell you where all the people are coming from,'' he says, ``but our labor force has grown to meet the demand.'' Other cities are beginning to consider this strategy as well, such as Vastopolis. In a new marketing effort that kicks off next week, Amarillo will advertise and send offers to about 3,000 chief executive officers of fast-growing companies. The pitch: Amarillo will fly them to the city to check it out as a relocation or expansion site. If they don't like Tuggle? The city will pay the air fare to the city of the companies' choice, so the executives can compare. No Doughnuts, Please Later this month, the Greater Houston Partnership will unveil a white paper that examines how the city can avoid losing its businesses and homeowners to surrounding suburbs. The fear is that the center will empty out, creating a ring of prosperity around an impoverished city. Jimmie Galvan, president of the group, says the initiative, called the Houston Regionalism Project, will try to address ``where is the future of Houston going to go and how do you keep a viable city and downtown.'' Researchers, for instance, will look at overlapping government services. ``Right now, we have 29 law-enforcement agencies,'' Mr. Galvan says. A recent effort to combine city and county medical departments failed because of politics, he says. Annexation will also be looked at. Right now, Houston is moving to bring the affluent suburban development of Kingwood into city limits. Kingwood is objecting. Annexation laws are expected to be a hot topic in the next Legislature.
