Georgia’s economy is losing ground, and quickly. As recently as 2001, per capita income in Georgia ranked 25th in the nation, a rapid rise from our ranking of 40th in 1979 and a reflection of our reputation as the economic success story of the South.
Today, as AJC business writer Michael Kanell pointed out Sunday, we have fallen back to where we were three decades ago, once again ranking 40th in per capita income, which is a key indicator of relative prosperity. And while the recession has played a role, our decline began well before the recession hit, and it is reflected in other statistics as well.
In 2001, for example, we had the 16th highest poverty rate in the country. As of 2011, we had the nation’s fifth highest poverty rate. That is not the type of trend that you want to see, and it indicates that our economic development strategy is failing.
As Kanell pointed out, the decline in per capita income can largely be traced to the fact that we are creating and attracting fewer and fewer high-wage jobs, in fields such as finance and technology, and more and more low-wage jobs in fields such as hospitality and retail. It’s a problem nationwide, but it’s especially acute here. The question is why.
Over the years, Georgia officials have launched a series of worthy initiatives — the Georgia Research Alliance, the Georgia Centers for Advanced Telecommunications Technology, and Georgia Tech’s Advanced Technology Development Center — to encourage high-wage job growth, but with limited success. The truth is, those efforts are far too small for the size of the obstacles they confront.
High-tech entrepreneur Vivek Wadhwa, writing in the new issue of MIT’s Technology Review magazine, explores why California’s Silicon Valley continues to be so successful in creating, attracting and keeping high-paying jobs in the technology field, and why other regions have failed:
“The reasons were, at their root, cultural,” he writes. “It was Silicon Valley’s high rates of job-hopping and company formation, its professional networks and easy information exchange, that lent the advantage. Valley firms understood that collaborating and competing at the same time led to success—an idea even reflected in California’s unusual rule barring noncompete agreements. The ecosystem supported experimentation, risk-taking, and sharing the lessons of success and failure. In other words, Silicon Valley was an open system—a giant, real-world social network that existed long before Facebook.”
The contrast between that business environment and the business culture of Georgia and metro Atlanta is stark. For example, Wadhwa notes that California all but bans “non-compete” clauses used by companies to keep entrepreneurial employees from changing jobs. In California, that policy frees people to innovate and to move where their talents can be deployed most efficiently. Georgia has done the exact opposite. In 2010, the control-happy state Chamber of Commerce engineered passage of a constitutional amendment that greatly strengthened non-compete clauses, throttling the free flow of talent to where can be applied most efficiently. (The amendment was sold to the public on the ballot as a means “to make Georgia more economically competitive.”)
Wadhwa also notes the importance of an attractive quality of life in drawing a workforce that can be highly selective in where they want to live. Georgia’s refusal to invest in amenities such as mass transit — a basic of modern urban infrastructure — and its malign neglect of the potentially transformational BeltLine project in Atlanta condemn the state and region to a second or third-tier competitor compared even to places such as Charlotte and Nashville.
Finally, he stresses the importance of a culture open to and welcoming of immigrants.
“This is the diversity—a kind of freedom, really—in which innovation thrives. The understanding of global markets that immigrants bring with them, the knowledge they have of different disciplines, and the links that they provide to their home countries have given the (Silicon) Valley an unassailable competitive advantage.”
Let’s just say that’s not exactly the image projected by Georgia’s political power structure.
