Demography is the South’s Greatest Economic Threat, Randle Tells NCEDA Luncheon
Mike Randle is a publisher, pioneer, pundit and entrepreneur. As founder and editor of Southern Business & Development, Randle has emerged as a go-to expert on the economy of the American South, commenting regularly not just in his own magazine and blogs but also for media organizations ranging from Bloomberg radio to The Wall Street Journal. About 100 NCEDA members heard his candid remarks at a post-conference keynote luncheon in Asheville on October 30.
Unlike conventional economists who look at the economy in terms of real-time data, Randle’s analytics are based on project activity of 200 jobs and/or $30 million in capital investment. “I think my methodology is better,” said Randle, who lives and works in Montgomery, AL. He noted two inflection points in the last 25 years. “In 1996, for the first time in the South’s history, services beat manufacturing,” he explained. “We freaked out.” Fracking in the US, combined with “skyrocketing” Chinese wages, reversed the pattern, and after 2010, manufacturing made up its lost ground vis-à-vis service industry projects. “Every other place in the world was less competitive than us,” Randle recalled. Since 2016, however, manufacturing in the South has eroded. “This recovery, which is now 10 and a half years old, peaked in 2015-2016,” he said. Automotive production, in fact, is currently in recession.
What is doing well? “Distribution is off the charts,” he said. “While manufacturing had this huge recovery after 2010, we’re now reverting to a service economy. That’s not good – not good.” The dearth of financial services projects in recent years also amounts to “a canary in a coalmine.” There were only three financial service deals meeting SBD criteria in 2018, for instance. The economy of the South – the 15 states from Texas to Virginia – is larger than either Japan or Germany. “We’re kicking ass,” Randle said. But the region’s success is threatened by challenging demographics. “We’re running out of labor, and that’s not good.” For the first time in decades, more Americans are leaving the workforce than joining it – to the tune of 8,000 workers lost every day. “The numbers are just horrible – and it’s because Millennials don’t think they can afford to have kids.” While there are perhaps only about one million people currently seeking work, the nation’s economy has seven million open jobs. The “baby bust” presents three possible policy choices: accept slower economic growth, have the government subsidize fertility or embrace immigration. Randle suggests the nation triple the number of legal immigrants allowed into the US. “It’s not about politics,” Randle said. “It’s math.”
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