After decades of growth, Georgia now facing a whole new economic reality

By Maria Saporta

The numbers are sobering.

Georgia’s boom days are becoming a distant memory. For decades, Georgia’s growth had far outpaced the nation’s growth rate. But that changed in the past decade, and economic forecasters predict this downward trend to continue in the coming decade.

Those numbers bring us to the hard truth. Georgia’s economy has been driven by growth and development. Either Georgia will need to figure out how to recapture its shine as a place to live or work. Or Georgia will have to restructure its economy to be less dependent on growth.

First the facts.

Since the 1960s, Georgia has enjoyed a multi-decade stretch of remarkable growth.

In the 1960s, Georgia experienced a 48 percent increase in jobs compared to a 31 percent increase for the United States.

In the 1970s, Georgia had a 39 percent gain in job growth versus 28 percent for the United States.

In the 1980s, Georgia’s job growth rate was still 39 percent versus 21 percent for the United States.

And in the 1990s, Georgia had a 32 percent gain in job growth versus 20 percent for the United States.

Then came the decades of the 2000s.

“In the decade of the ‘aughts,’ Georgia saw the number of jobs drop by 3.1 percent whereas the nation saw the number of jobs drop by 1.5 percent,” said Jeffrey Humphreys, director of the University of Georgia’s Simon S. Selig Jr. Center for Economic Growth. “The percentage decline was more than twice as steep in Georgia than for the United States as a whole.”

And for the coming decade?

Robert Sumichrast, dean of UGA’s Terry College of Business, told people attending the Economic Outlook lunch on Nov. 29 at the Georgia World Congress Center that Georgia will not replace the 360,000 jobs it has lost during the recession until 2020.

That’s four years later than the United States is expected to recover all the jobs that it lost in the recession — meaning Georgia will continue to lag the rest of the nation for years to come.

“Has Georgia lost its competitive edge in the United States?” Sumichrast asked rhetorically. “Clearly the answer is yes.”

This is not a comfortable place for Georgia to be. After all, this is not the way it’s supposed to be.

We are a Sun Belt state with tremendous assets, such as top quality colleges and universities, the largest and busiest airport in the world, a cluster of Fortune 500 company headquarters, relatively low taxes and a moderate cost of living.

All those ingredients have been mixed into a state that had been viewed as a place that could work through its differences (during the Civil Rights era) and as a place that welcomed the world (the 1996 Summer Olympic Games). The cherry on top was Atlanta — Georgia’s gleaming, thriving and progressive capital city.

But the sad truth is that we have been coasting on our former successes for years. And now reality has hit. Georgia is no longer viewed as a progressive, welcoming state. The state has matured, and it just hasn’t aged as well as other areas.

At one time, metro Atlanta was a magnet for the young educated people looking for the best place to jump-start their careers. Forward-looking states have found that appealing to college-educated youth is part of the foundation for a vibrant economic future.

But because they can choose where they want to live, young people are picking cities and states with great amenities — communities that offer a high quality of life for them — walkable live, work and play neighborhoods with sidewalks, bicycle lanes, parks, transit and a thriving arts and cultural scene.

The Brookings Institution listed the 10 cities with the highest percentage of workers with a bachelor’s degree or higher. Metro Atlanta is not on the list.

But the cities that are on the list do provide a clue as to the kind of places where those educated residents want to be.

The top 10 are: Boston-New Hampshire; Washington-Maryland-Virginia; Madison, Wis.; Raleigh-Durham, N.C.; Portland, Maine; San Francisco-Oakland-Vallejo; Seattle-Everett, Wash.; Austin, Texas; Lexington-Fayette, Ky.; and Denver-Boulder, Co.

In an article last week, the Wall Street Journal demonstrated that those 10 cities (with only one exception — San Francisco) were faring far better during the economic downturn than the national average in terms of unemployment rates.

On Nov. 30, the Atlanta Regional Council for Higher Education held a panel discussion on “How Colleges and Universities Drive Economic Growth” at the Commerce Club.

The bottom line was that if Georgia continues to invest in higher education, it will pay dividends for the state’s economic future. In answer to a question about the cuts in HOPE scholarships, Kennesaw State University President Dan Papp said that it could lead to “some of Georgia’s best and brightest” going “somewhere else.”

At the UGA Outlook lunch, Sumichrast exposed some other issues. He said a critical weakness is that Georgia ranks 34th among states in science and technology. Research and development of Georgia’s gross domestic product is “less than half the national average.” University research scores well, but Georgia lags in corporate and government research and development, he added.

When it comes economic development, Georgia also has lost its economic edge. “Because of low business costs and low taxes, Georgia often gets shortlisted on relocations,” Sumichrast said. “But Georgia does not have what it takes to close the deal…. Georgia will need to be more aggressive.”

Numbers, data and facts can be cold and cruel — especially when they zero in on Georgia’s weaknesses.

But they do give us an opportunity to face our new reality. And they also give Georgia and metro Atlanta an opportunity to strategically rise to the occasion.

David Pendered contributed to this column.

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

16 replies
  1. CraigSpinks says:

    What impact does our less-than-satisfactory public school system have on our state’s attractiveness as a site for high-tech businesses?

    Is any GA educrat so stupid as to believe that corporate site-selectors are fooled by our public school systems’ meeting woefully inadequate state standards?Report

    Reply
  2. rickdday says:

    It is time those who support the current Georgia leadership realize that it is not big business dinosaurs that will emerge as the survivors of These Hard Times, but the mammalia-like small business, living in the shadows of the Big Guys. Like Sherman, Big Business has stripped, burned stomped off to foreign lands and abandoned Georgia, benefiting only the political hacks in both parties who passed legislation that benefited the dinosaurs, in turn.

    In 2012, Atlanta has corporate headquarters instead of manufacturing plants. And there is always McD’s.

    Our only hope is to re-seed and start over, like a farmer after a drought year. We have a lot of space, thanks to greedy developers and greedy bankers loaning them amounts that will never be repaid. Soon, banks will be the largest real estate holder in the world, if they are not already.

    Small business entrepreneurship needs commercial buildings to create jobs. There is an abundance of young people with great ideas and a lot of empty commercial space. Standing between them is greed, corruption and regulatory red tape. Reboot. Refocus. Retool.

    Do the math. We can plan on rebuilding the future today, or we can maintain a status quo and back the same leeches who created this situation in the first place. Quit voting with your bible in hand. Pull out your wallet, behold its emptiness, and vote for saving the citizenry from sinking into desperation and crime.Report

    Reply
  3. John in ATL says:

    Excellent article, Maria!
    Expanded transportation alternatives to autos and endless road widening projects, and smarter use of limited water resources also are required — in addition to better educational commitment — are essential to Georgia’s future prosperity and improved quality of life.Report

    Reply
  4. John in ATL says:

    Great article, Maria.
    Tranportation alternatives to road widening and other tried-and-failed solutions, and smarter use of limited water resources also are needed — together with a renewed educational commitment — to provide better quality of life and prosperity to Georgia in the years ahead.Report

    Reply
  5. mparks says:

    This certainly is sobering…back in the mid 80’s when we moved here Atlanta was the coolest place…I mean it just “felt” cool to say you lived here…then the 90’s with the Olympics it felt even cooler. Atlanta was truly a “happening” place to be. But then came the 2000’s and something changed…gradually over the decade Atlanta lost it’s progressive glow. While we still have a low cost of living relative to most of the “in” places around the country where young people are apparently moving to in droves…obviously a low cost of living isn’t the defining factor for economic growth and prosperity and attracting a young educated workforce. I personally know several highly educated young people who have left Atlanta within the past couple years and moved to San Francisco…paying those higher taxes and high cost of living…no problem. What happened? Report

    Reply
  6. Mary Norwood says:

    Maria and David, thank you for an important column. Those of us who have labored for years for quality-of-life and neighborhood issues have seen the effect of decades of neglect. As we all know, people vote with their feet; they will go where they can get the best quality of life for themselves and their families. They want to be safe and they want the amenities that a great city and region can give. You are right. Atlanta needs to face this new reality and strategically reclaim—and regain—its allure.Report

    Reply
  7. The Last Democrat in Georgia says:

    Growing pains. Nothing that can’t be solved with more substantive investment in infrastructure (rail, road and water) and education. These investment must be made to get back on track, but we will make them and we will get back on track, one way or another. We’ll just have to go through some severe growing pains first.Report

    Reply
  8. woosnews says:

    The quickest fix we got for this economic quagmire is to restore full funding to the HOPE scholarship, and honor the commitment we already made to students and families in this state.

    Besides being the right thing to do, it’s an investment that would pay extraordinary dividends by drawing more funding to our research universities and related industries, and give the new generation of “job creators” a good reason to stay in-state.

    If Georgia doesn’t restore HOPE and repay students what they are legally due after holding up their end of the bargain, then this state deserves its reputation as a place where bad business practices prevail and education takes a back seat to deals made by self-serving politicians whole pander to big businesses for campaign funds and personal profits.

    HOPE was the best thing this state had going into the future. It was the lifeboat that could get us where we need to go – better than a trade office in China, better than another highway, better than a tax break for a foreign corporation that might want to build a factory here, or any other PR stunt this state could dream up.

    HOPE is a real investment in what matters most – people in Georgia learning and excelling in ways that could benefit all of us.

    If we want to get Georgia’s economy going again, we need to get that HOPE boat revved back up before it drifts too far off, and all the bright, hardworking kids who were abruptly denied the future they were promised here, take their talents elsewhere.Report

    Reply
  9. woosnews says:

    The best fix for Georgia to get out of this economic quagmire is to restore full funding to the HOPE scholarship, and honor the commitment we already made to students and families in this state.

    Besides being the right thing to do, it’s an investment that would pay extraordinary dividends by drawing more funding to our research universities and related industries, and give the new generation of “job creators” a good reason to stay in-state.

    If Georgia doesn’t restore HOPE and repay students what they are legally due after holding up their end of the bargain, then this state deserves its reputation as a place where bad business practices prevail and education takes a back seat to deals made by self-serving politicians whole pander to big businesses for campaign funds and personal profits.

    HOPE was the best thing this state had going into the future. It was the lifeboat that could get us where we need to go – better than a trade office in China, better than another highway, better than a tax break for a foreign corporation that might want to build a factory here, or any other PR stunt this state could dream up.

    HOPE is a real investment in what matters most – people in Georgia learning and excelling in ways that could benefit all of us.

    If we want to get Georgia’s economy going again, we need to get that HOPE boat revved back up before it drifts too far off, and all the bright, hardworking kids who were abruptly denied the future they were promised here, take their talents elsewhere.Report

    Reply
    • The Last Democrat in Georgia says:

      @woosnews

      We also need to find new sources of revenue to be able to restore full funding to the HOPE scholarship, which is why lately there has been talk of expanding gambling (casinos, horse racing and off-track betting).Report

      Reply
      • woosnews says:

        We could also cut our cost for HOPE with one very simple move – granting students college credit for successfully completed International Baccalaureate classes they took in high school, just as we grant college credit for AP courses. If it’s good enough for ivy league schools, it should be good enough for Georgia schools too.

        That one move could cut one or two years off of college requirements for some of Georgia’s top scholars. The state would save money on HOPE, and Georgia families would save money on their college kids’ living expenses, and kids who dare to take the very demanding IB curriculum would see an immediate benefit as well, and not have to sit through a couple of years of redundant classwork.

        I also would like to see an investigation of the Georgia Lottery administration. Wonder when Sonny Perdue thought families here should find out they had to radically change their financial plans if their kids wanted to go to college. A few months before the tuition was due was a little abrupt.

        I’d especially like to see a cost / benefit analysis of the Lottery’s advertising budget. Hard to imagine it pays to run the rich ducks on a plane or the fire breathing goat ad more than 500 times a week.

        And sadly, I expect the sorry consolation prizes we offered students in lieu of the HOPE they were promised will cost our state a lot more up front and in the long term. Given Georgia’s track record of failing banks and dim oversight of lending practices, we don’t need to be getting into the student loan business right now. And how much is it costing us to create a new bureaucracy to administer the so-called Zell Miller scholarship? We’ll probably end up spending more money on stationary for it than it would have cost us to go ahead and give students the full scholarship they were originally promised.

        The basic shortfall here is payback. Georgia’s politicians can find hundreds of millions of dollars to fund bloated road projects and programs that benefit their big campaign contributors, and corporations that will give them some kick back consulting work as soon as they leave office – or even a few perks while they’re still legislating … but what kind of personal payback does a hard working high school student have to offer? Zip. So no one went to bat for them. I’m afraid it’s that simple, and that sick. And if we don’t hold every legislator who decided to cheat our kids accountable – and tell them to get it right or get out of office – then we deserve the cheats we got. But our kids deserve better.Report

        Reply

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