There was a tremendous amount media coverage about the “Topgolf” development project.
The city was offering to Topgolf a $2.6 million economic development package to help construct a $39 million entertainment complex at the site of the former Beach Waterpark.
The Keller Administrations major concern with the Topgolf project is that it would primarily provide low-wage, part-time jobs and not “economic base jobs”.
According to City’s Economic Development Director Synthia Jaramillo:
“Topgolf is an entertainment venue, therefore it does not qualify as economic-based company. … So, when we’re talking about economic-based jobs, those are jobs or employers that provide higher wage jobs.”
Eight out of nine city councilors expressed strong support for the project and argued it would create 650 jobs, albeit short term and low paying, and that it will be a $39 million investment in Albuquerque’s future.
Notwithstanding the coverage of the project, very little was presented by the media about the difference between economic base jobs and service industry jobs Topgolf was offering.
ECONOMIC BASE JOBS VERSUS SERVICE INDUSTRY JOBS
An economic base job is one created or needed by a business or industry that increases economic growth of a region by increasing exports of manufactured products, goods or services from the local economy or region to another region or economy thereby increasing the size of the local economy with profits and cash flow from outside the region.
The corner stone of the “economic base theory” is that an increase in economic growth of a region or economy is dependent on increase in exports, manufactured goods or services from one region or economy to another region or economy and supplying markets outside the local economy.
A service-based industry is one that offers its products, goods or services primarily within a particular region and does not supply markets outside the region nor increase the economic base of a region.
In general, service base industries offer lower paying or minimum wage jobs not requiring much education or technical skills while and economic base industries provide jobs requiring higher education and higher trained skills.
WHERE HAVE ALL NEW MEXICO’S BRIGHTEST GONE?
According to US Census figures, in 2010, New Mexico’s median age was 36.7.
In 2017 the most recently released data show it was 37.8.
According to labor and census statistics, New Mexico is suffering from one of the highest rates of “out-migration” anywhere in the country.
A major reason for the increase in New Mexico’s higher median age is young people leaving New Mexico in droves, something that has been going on for the last eight years.
According to Jacqueline Miller, a senior research scientist with the University of New Mexico’s Geospatial and Population Studies department, a factor contributing to New Mexico’s increase in median age, is that “out migration among the working-age population and minors”.
https://www.abqjournal.com/1192801/states-population-is-skewing-older.html
According to the Census Bureau, the nation’s Hispanic population is young, with a median age of 29.3 compared with 38.0 for the country as a whole.
In New Mexico, the median age of the Hispanic population statewide was the same in 2010 and was 30.3 years old and was the same in 2017.
A recent Pew Charitable Trusts report shows that New Mexico’s population has grown at the slowest rate in the western United Stated than any other state during the past decade.
Economists estimate 42,000 more people exited the state than entered it from 2011 to 2016.
Between 2011 and 2016 there was an unprecedented exodus of young people leaving the state with the majority being the college educated.
What is happening, millennials are getting their education at New Mexico’s colleges and universities and then leaving the state for employment where the jobs are.
It is estimated that some 17,000 young people with a bachelor’s degree left New Mexico from 2011 to 2016.
Jeff Mitchell, director of UNM’s Bureau of Business and Economic Research states:
“The data clearly indicate that out-migration is occurring at a disproportionate rate in better-educated younger adults and people with bachelor’s degrees” in the state of New Mexico.
NEW MEXICO COLLEGE EDUCATION STILL GOOD BARGAIN
An August, 2017 study found that the average student loan for New Mexico college students was $21,314.
https://www.bizjournals.com/albuquerque/news/2017/08/11/heres-the-average-student-loan-debt-at-new-mexico.html
It is the second-lowest average student debt of any state in the country.
In LendEDU’s annual student loan debt report, New Mexico was ranked No. 50 in the United States.
Only Utah had an average student loan debt lower than New Mexico, at $18,810.
The LendEDU report also found that 55 percent of New Mexico college students graduate with debt.
By 2020, 65 percent of jobs will require postsecondary education, according to a report from the Georgetown University Center on Education and the Workforce.
When you are millennial at 22 graduating from a New Mexico college with a debt and there are no jobs where you can use your education, you’re not left with much choice but to move to a state that offers better job opportunities.
Further, if you a millennial lucky enough to have a family that can afford to send you out of state back east or west to more prestigious universities or colleges, there is absolutely no incentive to return to one of the poorest states in the country where there are no jobs.
If you are a millennial coming from a poor family and you want to go to a prestigious school and are forced to go into serious debt and saddled with $100,000 to $200,000 college debt, there are few jobs in New Mexico that are available to help pay an education mortgage debt.
State officials say there is no telling when the out-flow will end.
The New Mexico Higher Education Department reported in 2013 was the first time in state history that New Mexico’s older generation was better educated than the younger generation.
ECONOMIC BASED JOBS NEED A HIGHER EDUCATED WORK FORCE
No city and no state can afford to lose high-quality, educated workers, the key ingredient for any thriving and expanding economy.
The post-recession world demands a STEM-skilled workforce, Science, Technology, Engineering, and Mathematics (STEM) for jobs created and made available in science, technology, engineering and mathematics.
https://www.abqjournal.com/1192873/searchlight-brain-drain-hurts-new-mexico.html
At a minimum, workers need one or two years of education after high school, preferably from a technical or trade school.
Other jobs require an associate, bachelor’s or advanced degree.
When a state or city starts losing its qualified workforce, economies contract, unemployment rises and more people join the out-migration.
Only 71 percent of New Mexico’s high school students graduated on time, the nation’s second worst rate.
New Mexico’s rate of bachelor’s degrees for 25- to 34-year-olds is 22 % and is the second-lowest, according to the U.S. Census.
Youth unemployment in New Mexico is yet another problem.
As of April, more than 20 percent of teens age 16 to 19 were jobless, according to New Mexico labor statistics.
New Mexico has the fourth-highest unemployment rate in the country, while its neighbors and the rest of the nation are in a boom.
In February, 2018 New Mexico’s unemployment rate was 5.8 percent and Albuquerque’s unemployment was 4.2 percent.
The number of jobs is growing to nearly the pre-recession peak and the city’s gross receipts tax collections are increasing.
https://www.abqjournal.com/1190787/abqs-economy-gaining-steam.html
In May, New Mexico had 5.1 percent unemployment, a large improvement over the 6.5 percent unemployment it’s struggled with since 2014.
But New Mexico’s 5.1% unemployment rate was no match for surrounding states.
The unemployment rate for Texas in May 2018 was 4.1%.
https://www.deptofnumbers.com/unemployment/texas/
Arizona’s unemployment rate was 4.9 percent in April as the state’s economy added 5,300 nonfarm jobs, many in leisure and hospitality and construction.
https://www.seattletimes.com/nation-world/arizona-unemployment-rate-unchanged-in-april-at-4-9-percent
Colorado’s unemployment rate was 2.9 percent in April, 2018 breaking a seven-month run at 3 percent, according to a monthly update from the Colorado Department of Labor and Employment.
https://www.denverpost.com/2018/05/18/colorado-unemployment-april-2018/
Utah’s unemployment rate in March, 2018 was 3.1%.
https://www.good4utah.com/news/local-news/utahs-low-unemployment-rate-presents-new-problems-for-state-businesses/1048146830
COMMENTARY AND ANALYSIS
On February 19, 2016, it was reported that more than 10,000 people applied for 290 jobs to work at the new Cheesecake Factory location which opened at Coronado Center.
http://www.koat.com/article/more-than-10-000-apply-at-new-cheesecake-factory/5070017
Albuquerque’s employment rate has improved somewhat over the last two and half years, but not that much.
When you do not have a job, you’re probably not interested in hearing economic doublespeak from government officials of creating high paying “economic based jobs”.
Just ask the 10,000 people who applied for the 290 jobs with the Cheesecake Factory a few years ago that opened with all positions hourly pay jobs in the service industry.
As of April, more than 20 percent of teens age 16 to 19 were jobless, according to New Mexico labor statistics, a job pool no doubt that would be affected by the type of jobs offered by a developments such as Topgolf.
For the last 8 years, the prior administration failed to attract a single major corporation or company that offered economic based jobs to relocate to Albuquerque.
Assuming the Keller Administration is somehow successful in attracting and helping businesses that create economic based jobs, with New Mexico’s “brain drain” and mass exodus of educated millennials, the city and state may not have the work force to fill the positions.
The Keller Administration approved budget of $3.9 million for the Economic Development is so a meager as to be an embarrassment given the fact that the city has a total operating revenue and approved budget of at almost a billion dollars at $955,300,000 for fiscal year 2018-2019.
The City Council enacted a one-eighth of a cent tax increase that will generate an additional $55 million a year.
Gross receipts tax revenues from the state are now being reported in excess of what was projected.
The city is seeing a 4% to 6.8% increase in gross receipts tax revenues compared to last year from the state as a result of increase in business activity.
https://www.abqjournal.com/1178079/abq-sees-bump-in-gross-receipts-revenue.html
Candidate for Mayor Tim Keller proposed as a “big idea” creating personal or individual Tax Increment Districts (TIDS), more use of industrial revenue bonds and tax incentives to attract new industry to Albuquerque and create jobs.
As Mayor, Keller proposed no major increased appropriation for the Economic Development Department in the approved 2018-2019 budget.
As far as “economic based jobs”, the Keller Administration has yet to announce anything different, nor fund anything different, then what has been going on at city hall for the last 8 years.
Albuquerque City Government and its Economic Development Department can and must expand and find better ways to use financial incentives for small business development.
Simply put, small businesses create economic based jobs.
The City’s Economic Development Department needs to find a better way to help small business with start up funding.
A good start would be funding a $20 million initial startup fund for new small businesses with claw back provisions and with the program administered by the Economic Development Department.
Albuquerque can and must expand and find better ways to use financial incentives for economic development in the growth industries.
Tax increment districts (TIDS), industrial revenue bonds, and economic development investment programs such as initial startup funding with claw back provisions has always been the traditional approach.
Albuquerque needs to pursue with a vengeance real growth industry like healthcare, transportation and manufacturing, the film industry to diversify our economy.
Public-private partnerships in the growth industries and even small business development where ever possible should be encouraged and developed.
Albuquerque’s taxpayers must be convinced by Mayor Keller and the City Council of the importance of economic development in small businesses and the growth industries and not the service industries with low paying, minimum wage and tip jobs..
Our elected officials and the business community, including the Greater Albuquerque Chamber of Commerce, Albuquerque Economic Development (AED), the Economic Forum, NAIOP and the banking, finance and development industries, need to think long and hard about finally doing something to help small business development and attract new industry instead of just being satisfied with protecting their own financial interests, bottom lines and membership rosters.
Otherwise, the only jobs for millennials will be employment in old age homes, assisted living facilities, hospitals and funeral homes taking care of the needs of the age group of 60 to 90 or working for the Cheesecake Factory.
For more link to “Race and Equity Report Gives Economic Development Roadmap”:
https://www.petedinelli.com/2018/06/21/race-and-equity-profile-report-gives-economic-development-roadmap/
