A new way of looking at what makes Georgia’s economy tick
By Tom Baxter
Nearly every discussion about Georgia’s economic future begins at the top, with high-tech companies like Digirad, the medical imaging firm which recently announced it’s relocating its headquarters to Atlanta, or prime industrial plums like the KIA plant in West Point.
But a provocative report by a new group, the Essential Economy Council, argues that the upper tiers of the state’s economy rest on a cluster of low-end economic sectors which face severe challenges in the years ahead.
It’s no secret that the council, supported by several business groups and co-chaired by former Republican state senator and newly elected Department of Transportation Board member Dan Moody of Johns Creek and former Democratic state Sen. Sam Zamarripa, was formed in reaction to the 2011 Georgia immigration law. But even if the congressional negotiations currently underway in Washington are successful and the nation’s immigration issues get resolved in some grand bargain (don’t hold your breath) the problems spotlighted in this report are crucial to the state’s future.
If nothing else, the report serves a clarifying purpose by drawing a circle around a group of economic sectors we might not have connected before. The Essential Economy refers to the workforce which drives:
— The restaurant and hospitality industry (maids and dishwashers, for instance).
— Distribution and logistics (truckdrivers and warehouse workers).
— Agriculture and poultry (onion pickers and chicken plant workers).
— Light construction and landscaping (homebuilding crews and tree trimmers).
— Personal care and assisted living (nursing home attendants – this, by the way, is the fastest growing sector in the Essential Economy).
— Building maintenance and facilities services (janitors and cleaning women).
What all these have in common are easy entry, manual labor, high potential for upward mobility and entrepreneurship (for those willing to work very hard, at least) and the fact that the jobs can’t be exported. In considering upward mobility, you have to think not only of the low-wage worker who waits tables or plants shrubs, but the crew bosses and small business owners working their way up the economic ladder.
According to the report, the Essential Economy accounts for a quarter of all the jobs in Georgia, and contributed 12 percent, or $49 billion, to the state’s Gross Domestic Product in 2010. The percentage of those involved in these sectors is remarkably consistent from the richest to the poorest counties of the state. And, Zamarripa said Monday, these sectors are the “enablers” for the higher-paying jobs farther up the ladder.
“You couldn’t have built the KIA plant without having a very health Essential Economy around it, because everyone at first needs a place to stay – in fact they need an abundance of places to stay. They need a restaurant industry in abundance. They need all the physical labor associated with the low end of construction, and they need the supply chain of food that’s provided by the Essential Economy work force,” Zamarripa said.
Essential though it may be, this sector of the state’s economy is threatened on several fronts. First, there’s a progressively aging workforce.
“I don’t know if the average person quite understands how threatening this is to our economy, because the demographic of these who are retiring or incapable of doing certain tasks any longer is big and getting bigger,” Zamarripa said.
The second threat is what he calls the “aspirational” economy.
“We’ve all raised our children to be great and important, and none of them will pick up their own clothes,” he said. “No one raises their children to go into the Essential Economy anymore, except in management.”
Third, there’s the cost of government regulations, which place an increasing strain on enterprises where the profit margin is already very narrow and generally impervious to improved efficiencies. Zamarripa uses the example of watermelons, which he said are sold on a cost structure which is the same as when our grandparents were eating them. “You just can squeeze any more profitability out of certain sectors. because they long ago settled into a cost structure that’s almost a custom,” he said.
Only lastly does the report get around to the threat to the Essential Economy posed by an inadequate U.S. immigration policy and the states’ scattershot efforts to do something about it themselves. But you only have to walk into any nursing home, restaurant kitchen or chicken processing plant to understand that cheap immigrant labor has become essential to this economy.
“The intent of the report was to give people a relevant way to consider issues, not only related to immigration, but related to this workforce, which is going to be here into perpetuity,” Zamarripa said.
Whatever your views on immigration, this report is well worth reading and thinking about. The feds may solve some of our problems, but most of them we’re going to have to tackle ourselves.