With lagging wage growth, local economy’s ranking plummets
The Columbia metropolitan area has dropped significantly since 1999 in a ranking of economic strength, from 45th to 130th, in large part because earnings have failed to keep up with the national average, according to an expert on local economic development.
“You’re not a bad economy, but your trend is going the wrong way, and that’s a problem,” William Fruth, president of policom Corp., said during the keynote address at the annual Economic Outlook Conference at Stoney Creek Inn on Tuesday. The event was coordinated by the Columbia Chamber of Commerce and Regional Economic Development Inc., or redi.
The bottom-line message was similar to the one given by Greg Steinhoff, the director of Missouri’s Department of Economic Development, last November: Columbia has not landed a major industrial employer since Quaker Oats built a plant here 12 years ago, and the city needs to diversify its economy by attracting more industries.
POLICOM is an economic research firm that specializes in analyzing local and state economies. In POLICOM’s annual rankings of economic strength, Columbia was listed 130th out of 361 metropolitan statistical areas, up from the 136th ranking in 2005 that followed a steady decline.
Economic strength is defined as the long-term tendency for an area to consistently grow in both size and quality, with quality measured by average earnings per worker.
In a separate comparison measuring earnings from 1995 through 2004, and using Boone County rather than the whole MSA, the ranking was closer to the bottom, at 277.
Fruth said the Columbia area is taking some positive steps toward reversing the trend, such as setting up a business incubator and working with the University of Missouri to develop the economy by turning research breakthroughs into jobs
POLICOM is an economic research firm that specializes in analyzing local and state economies. In POLICOM’s annual rankings of economic strength, Columbia was listed 130th out of 361 Metropolitan Statistical Areas, up from 136th in 2005 after a steady decline.
Economic strength is defined as the long-term tendency for an area to consistently grow in both size and quality, with quality measured by average earnings per worker.
In a separate comparison measuring earnings from 1995 through 2004, and using Boone County rather than the whole MSA, the ranking was closer to the bottom, at 277.
A series of line graphs illustrating POLICOM’s data shows earnings in Boone County measured annually against the weakest and strongest MSAs. Boone County keeps up with the strongest until 1995, when it starts to drop off.
Fruth said the Columbia area is taking some positive steps toward reversing the trend, such as setting up a business incubator and working with the University of Missouri to develop the economy by turning research breakthroughs into jobs. (see related story above.)
“This may be one of the best ways for Columbia to grow,” Fruth said. “Take inventions and lead them (startup companies) down the path to develop. An incubator is a place where they can go to grow out.”
POLICOM once did a study of university towns and found that eight of 10 universities did not help cause economic growth, Fruth said.
Several years ago, President Elson Floyd added economic development to the University of Missouri System’s mission, and currently MU is developing another research park off U.S. Highway 63, at what will eventually be the Gans Creek exit.
“That’s a big step,” Fruth said. “Your university wants to be involved in economic development.”
Fruth said there are two persistent myths about economic development. One is that quality of life brings in employers. “What brings them in is how profitable they will be.” The other is that creating any kind of job helps the economy. “There is no benefit in creating low-wage jobs,” he said.
“You’re a strong enough economy that there is no reason to go after low-wage jobs.”