Beating Expectations: How States Defy the New Normal
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Since the financial panic of 2008, “the new normal” has become the phrase of choice to depict the future of the American economy. Coined by Mohamed El-Erian at PIMCO, the phrase has been used to describe our world as one "of muted western growth, high unemployment and relatively orderly delivering,” by Bill Gross, the company's managing director.
This notion of reduced expectations has been widely accepted by economists on both the left and the right. Libertarian writer Tyler Cowen, in his landmark work The Great Stagnation, makes many of the same points, claiming that the U.S. “frontier,” has closed technologically as well as in terms of human capital and resources. He maintains that we already have harvested “the low-hanging fruit” and we now rest on a “technological plateau,” so any future economic progress will be difficult to achieve.
To be sure, the relative weakness of the current recovery – arguably the weakest in contemporary history – does support the “new normal” thesis. But not everyone, or every state, accepts the notion of inevitable, slow growth and gradual decline. From the onset of the recession, some states have largely avoided the downturn. By the end of 2011, six states – North Dakota, Wyoming, Alaska, Utah, Texas and Montana – showed more than 8% job growth over the past decade. Another 22 had shown some, although less robust, employment increases compared to 2001.
More important still, nearly every state enjoyed some overall private-sector job growth between January 2011 and January 2012. Most critically, growth has spread to many states hardest hit by the recession, including Michigan, California, and Florida. But the strongest job growth continued to take place in other states, notably Louisiana, Oklahoma, Texas, Utah, and North Dakota.
Understanding the Geography of Growth
The new geography of growth reflects many of the intrinsic strengths of the U.S. economy that many commentators on either side of the spectrum often miss. After a brief lapse, the country is already outperforming all its traditional high-income rivals in Europe as well as Japan, as it has done for most of the past two decades. Key U.S. assets include surging agricultural and energy production, the general rebound in U.S.-based manufacturing, and unparalleled technological supremacy. The country remains attractive to both foreign investors and skilled immigrants.
Resource growth, notably in energy and food, helped propel the strongest states to defy the “new normal” of low employment and income growth. Texas, the states of the Great Plains and parts of the Intermountain West never suffered from either the housing bubble or from high unemployment. The 2012 Forbes “Best Cities for Jobs” list is largely dominated by metropolitan areas in these regions, including five of the top 10 fast-growing large regions and seven of the top 10 overall. Small cities in the Great Plains have done particularly well. Five of the six best cities for “starting over in 2012,” according to TheStreet.com, were located in the Dakotas, Iowa and Nebraska.
This reflects the reality that, since the onset of the new century, much of the sustained growth in the world has taken place in regions that produce basic commodities like energy and food, rather than in the financial or information capitals. In the high-income world, the consistently best performing countries since 2008 have also tended to be resource-rich ones such as Norway, Australia and Canada.
The key here lies in commodity and energy markets that are increasingly global and driven by expanding markets in the major developing countries. This also has helped keep energy prices high, particularly for oil. Texas alone has added nearly 200,000 jobs in its oil and gas sector over the past decade while Oklahoma has added some 45,000. These jobs have been an outstanding driver of high-wage employment, with an average salary of upwards of $75,000.
More recently, the momentum of prosperity has spread to the manufacturing sector. In the last two years the nation has added more than 400,000 manufacturing jobs, led by states traditionally strong in the industry, yet hit hardest by the recession. Though these gains are small compared to the losses earlier in the decade, the growth is encouraging. In a stunning reversal, Midwestern employers have seen the fastest jump of any region of the country – some 18.5% – in planned hiring of college graduates. Unemployment there now stands below the national average.
Finally, after a long period of stagnant job growth, the country’s tech sector has also begun a rapid expansion. Not surprisingly, much of this is occurring in hot beds such as California’s Silicon Valley, and in Washington state, Utah and Massachusetts. But when we take a broader measure of STEM (science, technology, engineering and mathematics) job creation – covering technically skilled workers in all industries – the most dramatic growth over the past two years has taken place in states with strong manufacturing and energy economies, including Michigan, South Carolina, North Dakota, Texas, Alaska and Ohio.
For the U.S. to be successful, this new geography of growth needs to extend across the 50 states, and expand for long enough to significantly lower the high rate of unemployment. This will require something more than a single-sector focus. Attention must be paid to both basic and advanced industries. Technology growth alone cannot turn around most regions and states. For example, Silicon Valley’s social media boom may have propelled it once again into the ranks of the fastest-growing employment centers, but the nearby Oakland area lags near the bottom, as do most California metros.
More than anything, governments and business leaders need to appreciate how these sectors interact with each other. To be effective across a broad array of geographies, technology needs to be applied to a broad array of industries, including but not limited to computers, media and the Internet. These technologies are also a means to unlock the productive potential of both mundane traditional industries and the service sector. Technology, as the French sociologist Marcel Mauss once put it, “is a traditional action made effective.”
America’s great advantage in overcoming “the new normal,” then, lies in melding the power of “creative” entrepreneurs with broader-based innovation throughout the overall economy. The primary driver for this process must lay in the appeal the country still has to its current residents, as well as to companies and ambitious people from around the globe. Despite the setbacks of recent years, the United States remains the ultimate locus of opportunity and innovation on the planet.
Back to Basics: The Enduring Importance of the Agricultural Economy
With the rise of the information age, many have argued that countries rich in brains – expressed in the ability to manipulate abstract concepts, images and media – would establish dominion over the brawn of producers of raw materials. Ironically, Taichi Sakaiya, the best-selling Japanese author and futurist, argued that his country's “greatest advantage” stems from its lack of natural resources. Thomas Friedman cites the experience of east Asian countries such as Taiwan and Japan, and of Scandinavian countries as suggesting that a lack of natural resources actually sparks innovation and economic health, while too great a concentration generally hinders progress.
This approach misses the fundamental point that the primary advantage of the U.S. lies in its combined richness in both resources and technological prowess. Unlike most high-income nations, the United States remains extraordinarily resource-rich; its ability, for example, to feed both itself and the world remains one of its critical competitive advantages. The U.S. is resource-rich and talent-rich at the same time.
Today, countries with large agricultural surpluses – Australia, Canada, and Brazil, as well as the U.S. – possess intrinsic economic advantages. Globally the business of agriculture is booming. The International Food Policy Research Institute (IFPRI) reports foreign investors sought or secured between 37 million and 49 million acres of farmland in the developing world between 2006 and mid-2009. Investors, including hedge funds and overseas companies, are also investing heavily in U.S. cropland.
Of course, having a strong food resource base does not guarantee a strong overall economy; witness Argentina over the last century. But it does give a leg up to those countries that employ their agricultural surplus as a base for wider economic growth.
This process is accelerating. In 2010, the U.S. achieved a record for the number of acres planted with soybeans nationwide, with the states of Kansas, Nebraska, North Dakota, and South Dakota seeing some of the biggest year-over-year increases. In 2012, growers planted a 75-year-high in corn acreage, led by increases in Iowa, Idaho, Minnesota, and the Dakotas. This expansion has been led by a boom in agriculture exports: In 2011, the U.S. exported a record $135 billion, with a net balance of $47 billion the highest in nominal dollars since the 1980s.
Much of this growth has been paced by demand from China, which accounts for the consumption of almost 60% of the world’s soybean exports and 40% of its cotton. China, simply put, lacks the water and land resources to feed its people, much less its awesome industrial machine. It has effectively dropped the old Maoist goal of self-sufficiency, and now seems ready to rely more on food and fiber imports from leading agricultural countries like the U.S.
The ability to meet this growing demand from China and other developing countries is tied directly to the high technological level and productivity of the U.S. farm sector. American farms do more with less. Among crops measured by the federal government since 1866, 20 record national yields-per-acre have been set since 2007, particularly in 2009 and 2010. Given strong global demand, the agricultural economy never really fully felt the Great Recession. Agriculture’s new normal has been overwhelmingly positive. Farm states – notably the Dakotas, Nebraska, and Iowa – rank among those places with the nation’s fastest-rising incomes, best new job growth, and lowest unemployment rates.
The New Energy Boom
In the last half of the 20th century, America devolved into a major importer of raw materials, especially oil. A persistent negative balance in energy has accounted at times for close to half of U.S. imports. Rising prices devastated the economy, while providing little spur to energy employment here. Some of the more histrionic pundits, such as James Howard Kunstler, predicted a coming catastrophe due to depleted resources and ever-rising prices that would usher in an end to the largely suburban “American way of life.”
Such predictions seem particularly overwrought given recent shifts in energy discoveries. Due in part to new or improved technologies such as hydraulic fracturing – fracking – and horizontal drilling, estimates of North America’s energy resources have skyrocketed. By 2020 these new sources from shale will represent an estimated two-thirds of U.S. oil and gas production. By then, according to the consultancy PFC Energy, the United States will surpass Russia and Saudi Arabia as the world’s leading oil and gas producer.
A westward shift in energy development is on, with North America emerging as the lead player. In 2011, the United States became a net exporter of petroleum products for the first time in 62 years. American imports of raw petroleum have fallen from a high of 60% of total to less than 46%.
Overall, according to Amy Myers Jaffe, Director of the Energy Forum at Rice University's Baker Institute, U.S. oil reserves now stand at more than two trillion barrels; Canada’s reserve is slightly more. Together, this constitutes more than three times the total estimated reserves of the Middle East and North Africa.
Observers such as the New America Foundation’s Michael Lind believe that new discoveries, particularly of natural gas, mean that we might actually be living in an era of “peak renewables,” and at the onset of a “very long age of fossil fuels.”
The energy boom has supercharged the economies of the states that have welcomed this growth, including Texas, Oklahoma, Louisiana, North Dakota, Wyoming, and Alaska. These states have produced more jobs, and enjoyed generally the best GDP and income growth over both the past decade and last two years. Ohio and Pennsylvania, where there have been significant new finds of shale oil and gas, hope to use this production to spur the growth of their more traditional industrial economies.
The Revival of Manufacturing
Many media members and pundits believe that America’s industrial base will continue to atrophy over time. Some even hold that manufacturing constitutes, as John Naisbitt observed two decades ago, “a declining sport.” To be sure, over the past twelve years the country lost 5.5 million manufacturing jobs, nearly one-third of the manufacturing workforce.
Yet this decline has not made industry less important. Manufacturing gains now take place primarily in high value-added sectors, making them more integrated with the technical economy and more critical to the overall competitiveness of the country. As a recent report from the Breakthrough Institute puts it:
The reality is that manufacturing isn’t dying – it’s changing. Even as manufacturing has undergone a relative decline, it has actually become more important to the health of the U.S. economy. The sector is transitioning from low-tech, labor-intensive industries toward a manufacturing sector that is technology-intensive, high-productivity, and at the heart of our nation’s innovation system. With a wide array of breakthroughs in technology, productivity, and management, a new manufacturing has taken hold.
This new, or “advanced,” manufacturing has several hallmarks that distinguish it from the low-skilled enterprise that still holds sway over popular conceptions of American manufacturing. Today’s modern factory is heavily reliant on technology that allows manufacturers to engage in more precise and increasingly productive work.
Manufacturing’s role in promoting job and income growth is often understated, the report continues. This is particularly true in traditionally manufacturing-oriented locations. As University of Washington demographer Richard Morrill points out, communities with strong manufacturing economies tend to have more equal economies and better opportunity for the working class.
Most critically, manufacturing activity drives growth in other sectors of the economy. About one in six of all private-sector jobs depend on the manufacturing sector, and every dollar of sales of manufactured products generates $1.40 in output from other sectors, the highest of any industry. The sector funds two-thirds of the nation’s private research and development, and employs 64% of its scientists and engineers.
The role of manufacturing in boosting state economies has been growing in recent years. Although manufacturing employment overall has dropped, the percentage of higher-wage, skilled industrial jobs has been climbing over the last decades, and wages for these workers have increased. Overall, the average American factory worker now produces $180,000 worth of goods a year, three times (in today’s dollars) what was produced by his or her counterpart in 1978. Workers in the nation’s manufacturing sector earned $73,000 on average in 2011, $20,000 more than the average job.
Economic output generated by the nation’s manufacturing sector has remained strong even through job losses. Since 1988, value added by manufacturing has more than doubled, and manufacturing output is up sevenfold since 1947. The United States remains the world’s largest manufacturer, accounting for one fifth of the world’s value added in manufacturing, more than China, India, Brazil, and Russia combined.
American industry is now growing faster than that of most of its major competitors, including Germany, Japan, and even China. Part of this upturn can be traced to the energy boom, which has generated an increased demand for pipes and other equipment, sparking the growth of new factories even in such long-hard-hit places as Youngstown, Ohio. Ample supplies and low natural gas prices have led petrochemical companies to undertake major new expansions. It is no surprise that the biggest backers of shale gas exploration are prominent CEOs of industrial firms. A recent study by PwC suggests that shale gas could lead to the development of one million industrial jobs.
Industrial growth is a critical component in upending the “new normal.” Mark Perry from the University of Michigan-Flint, a Chamber Foundation fellow, has demonstrated how manufacturing in the last year has expanded by three times the rate of overall GDP. About 425,000 jobs have been added, outpacing the national average. It is not surprising, then, to see that the fastest turn-around in manufacturing jobs includes Michigan, Indiana, Ohio, Illinois, and Wisconsin, which felt the brunt of the collapse of the auto industry and other production.
As in energy and agriculture, global factors are again at play. Rising wage rates in China – from roughly one-third to one-half U.S. rates in a decade – and problems associated with protection of trademarks and other issues have led many executives to reconsider potentially expanding production in the U.S. Since 2010, the percentage of U.S. executives who have moved production back home has risen from 12% to 22%, according to a survey by the site MFG.com. One in three is studying the proposition.
To take full advantage of these opportunities, states need to focus on technical training to avoid what may become major labor shortages. Rather than a surplus of industrial workers, the auto industry could face shortages of certain skills as early as 2013. Even at the height of the recession in 2009, in a survey of manufacturers, 51% were experiencing worker shortages in skilled production areas. Concerns about skills shortages were particularly acute in leading industries such as aerospace and life sciences. In 2011there were 50,000 total U.S. job openings in industrial engineering, welding, and computer-controlled machine-tool-operating jobs alone. Employers must be willing, however, to offer the pay premiums and to invest in corporate training to attract specialized workers from within their region or from other states.
The Techno-cultural Edge
Despite occasional assertions over the last decades about the country’s erosion of scientific talent, the technical dominance of the United States remains firmly in place. In terms of published technical articles, for example, the United States alone produces three times as many as second-place Japan. The U.S. has a wide lead in technical spending and dominates such areas as pharmaceutical research.
The composition of the critical software industry has been particularly revealing. Of the world's top 500 software companies, the Anglosphere – the English speaking countries – maintains a huge lead. Nine out of the 10 leading software firms are based in the U.S. (the exception is SAP, which is German). As for the Internet, there is simply no significant foreign equivalent with the global reach of Microsoft, Amazon, Google, Apple, or Facebook.
The technology sector is, after a long break, once again growing in its three historic hotbeds: the states of California, Washington and Massachusetts. Vermont, Utah, Washington, Michigan, and New Hampshire all experienced even more rapid tech-job-growth per capita, over three percent last year.
Some believe we may be on the verge of a significant tech expansion that could last several years. The growth of the “app” economy has been particularly marked, with some estimates of employment at over 466,000 jobs today, up from zero in 2007, when the iPhone was unveiled. At the same time, demand for workers with “deep analytical skills” typical in high-tech industries, according to McKinsey, could reach a half million by 2018.
The rise of social media and other Internet-based culture represents another U.S. area of strength. The cultural exports of the United States represent close to a majority of all audiovisual sales, easily dwarfing the old industries of countries such as France and Germany, as well as those rising from the developing world, such as Brazil and India.
These cultural exports are not limited to English-speaking or high-income countries. In 2010, box office revenues were flat in the U.S. and Canada, but grew 25% in Latin America, while the Asia Pacific region increased by 21%, with China alone accounting for 40% of that region’s box office take. The American predominance could also be seen in the music business, with American artists dominating the best-selling lists. This pattern has alarmed many Europeans for years, and recently led China’s President Hu Jintao to seek measures defending the country’s “culture” against American and other western influence.
The Demographic Edge
Even though immigration has slowed in recent years, it remains a major source of new workers and innovation. The United States’ record of healthy and sustained immigration marks a major strategic competitive advantage. Due largely to immigrants and their offspring, the U.S. is the only major high-income country with a birthrate above replacement; it's currently at 2.1%.
In contrast, many of our major competitors face a future of rapid aging and slowly growing – or even declining – population. Close to half the world’s population, notes demographer Nicholas Eberstadt, lives in countries with birth rates below replacement level. Rather than out-of-control baby making, the world, he suggests, is experiencing a “fertility implosion.” Population stagnation – and even decline – has become commonplace in much of Europe and throughout Asia. Eastern Europe’s population is dropping; western Europe's is stagnant. In Japan, since 2010 the total number of people has declined, and by 2015 there will be fewer births than deaths.
Even fast-rising countries in East Asia – such as Korea, Taiwan, Singapore, and China – face slow and even negative population growth. In all these countries, rapid aging, dramatically reduced marriage rates, and low birth rates are now the norm. This will have a big effect on workforces and markets. Between 2000 and 2050, for example, the U.S. workforce is projected to grow by 37%, while that of China will shrink by 10%, the EU will decrease by 21% and, most remarkably, Japan’s workforce will fall almost 40%.
Demography could prove ruinous to these economies in terms of consumption and growth, and, perhaps more importantly, in terms of their ability to support retirees. By 2050, barely one in five Americans will be over 60, while the proportion in Japan, Germany and Korea will be closer to two in five.
America’s “demographic exceptionalism,” as Eberstadt puts it, represents an enormous advantage for the coming decades. This will be particularly critical in terms of the innovation economy. “Youth,” two researchers recently observed, “brings more than a base of workers or taxpayers; it brings the
ineluctable energy that propels everything.”
Much of this useful energy will come from abroad. American universities continue to attract the most foreign students. More than half of all skilled worker immigrants globally come to the United States. Although it's likely that many of these students will be returning to their booming homelands, many will not. At Tsinghua University, China’s MIT, estimates are that about 50% of those who study abroad never go home.
Perhaps the greatest impact of immigrants on state economies will be in the all-important entrepreneurial sphere. Immigrants by nature tend to be entrepreneurial, as most come to America to find a better life for themselves and their families. The immigrant role in creating new businesses has been particularly critical during the current recession. According to a recent Kauffman Foundation report, the foreign-born were the one bright spot in the country’s otherwise shell-shocked entrepreneurial sector. Overall, according to Kauffman, the share of new entrepreneurs that are immigrants has risen from 13.4% in 1996 to nearly 30% this year.
These businesses can be found in a broad array of industries, including food, retailing, manufacturing, and technology. Perhaps most remarkable has been the movement of Asians into the technology industry. Between 1990 and 2005, immigrants, mostly from the Chinese diaspora and from India, started one of every four U.S. venture-backed public companies. In California, they account for a majority of such firms.
It would be a mistake, however, to see immigrant entrepreneurs as relevant largely to traditional technology hubs and big cities. Beginning in the 1990s, immigrants rapidly moved into regions once considered inhospitable to newcomers, particularly non-whites: exurbs, the Southeast, and the Great Plains. Immigration has declined in virtually every state since the recession, but some unlikely states have performed best in maintaining immigration rates, including Mississippi, Wyoming, West Virginia, North Dakota, Kentucky, and Montana.
Fostering immigration makes economic sense in the long term, particularly efforts targeted at skilled and working age people. The reasons for coming to America remain compelling: the generally high quality of life (particularly housing) available here, political freedoms, and, over time, a stronger economy. This explains why many of China’s new crop of billionaires seeks to emigrate to the United States: to protect property, to have a second child or to live a freer life. Indeed, among the 20,000 Chinese with incomes over 100 million Yuan ($15 million), 27% have already emigrated and another 47% reported that they are considering it.
The Role of Foreign Investment
Many of these same factors – favorable demographics, natural resources, and a strong constitutional order – also attract firms from abroad. Long the world leader as a destination for overseas investment, the U.S. is extending its lead as the favored land for overseas capital.
Since 2008, foreign direct investment into Germany, France, Japan and Korea has stagnated. In 2009, overall investment in the European Union dropped 36%. In contrast, foreign investment in the U.S. rose 49% in 2010, mostly coming from Canada, Europe, and Japan. Foreign investment now stands at the fourth-highest level in history.
The transformative role of foreign investment in America is nothing new. After all, the country started as a colony of England, and for much of the 19th century remained dependent on European investors for the building of everything from canals to railroads. Without European capital, the settlement of the west and the rise of cities such as New York would have been far slower.
Now foreign firms are rediscovering America’s intrinsic advantages. In particular, our relatively vibrant demographics contrast strongly with such key countries as Japan, Korea and Germany, all of which are aging far more rapidly than is U.S. Many investors, meantime, are reluctant to put their money in China, given the country's authoritative political system.
In addition to technology and trophy real estate, the investment boom encompasses more basic industries that are best suited to our large, resource-rich country. Investment in the burgeoning energy sector more than tripled to $20 billion between 2009 and 2010. The shale revolution, in particular, has attracted foreign interest. Energy firms from China, France, and Spain all have made major investments in the shale fields of Ohio, Colorado, and Michigan. French giant Total recently paid $2.3 billion for minority stakes in the vast oil and gas holdings of Chesapeake Energy.
Perhaps even more important has been a surge in industrial investment, which rose $30 billion just between 2009 and 2010. Much of this growth is concentrated in the chemical industry, as well as in automobiles, steel, and other transportation sectors. Investment is heavily focused on the southeastern U.S. states and Texas; not coincidentally, most surveys reveal these locations have the country’s most hospitable business climates. The states of the old Confederacy, according to a recent study by Site Selection magazine, boast all of the top five business climates, and ten of the top twelve.
Foreigners, particularly from large global corporations, seem destined to play an active role in the nation’s industrial revival. This trend has certainly been illustrated by companies such as Mercedes, whose largest U.S. plant is in Tuscaloosa, Alabama. Last year the company invested $350 million in the facility.
Mercedes is certainly not alone, however. Arch-competitor Volkswagen last year announced that it plans to build a new assembly plant in Chattanooga, TN. Nissan, Toyota, Rolls-Royce, and Kia all have announced major new plant openings or expansions over the past three years throughout the region.
These investments are not inconsequential. With the average cost of building these facilities at more than $1 billion, and the higher-paying manufacturing jobs they represent, such plants constitute major employment generators themselves. They also bring with them parts suppliers and other industries related to auto manufacturing. Alabama, for example, has seen major steel mill investments, including $4.6 billion from Germany’s ThyssenKrupp.
Over the next decade, these investments could transform the nation’s industrial structure. Alabama and Kentucky already produce almost as many cars as does Michigan. According to the U.S. Department of Labor, Michigan still leads the country in auto employment with 181,000 jobs, followed by Indiana. But the next three states are Kentucky, Tennessee, and Alabama.
Battle tested in world markets, foreign manufacturing companies are often both sturdy competitors and reliable employers. Overall, according to the U.S. Department of Commerce, foreign manufacturing firms, in autos and other areas, have proven far less susceptible to layoffs than their domestic competitors. They also tend to offer higher salaries on average than U.S.-based firms.
Growth and America’s Moment
Huge increases in food exports, domestic energy investment, a revived manufacturing sector, a burgeoning tech sector, vital demographics, and increased investment from abroad establish a strong base for long-term secular recovery of the U.S. economy. Rather than facing a dismal future of the new normal, we may actually be on the cusp of a recovery that could become one of America’s finest moments.
The key to making this work, for the states and the nation, lies in promoting broad-based, long-term economic growth. Economist and National Chamber Foundation fellow Bret Swanson has found that there is absolutely no way the country – or the states – can avoid ever greater, debilitating deficits without economic growth. Many states must contend with growing unfunded pension obligations that provide a serious threat to maintaining adequate levels of investment in education, infrastructure, and other job creation efforts. State pension plans were funded at an estimated 78% in 2009, creating a total unfunded liability of $3 trillion.
In the past decade, the nation’s GDP growth rate was a measly 1.67%, roughly half that enjoyed in the preceding three decades. Growth of three percent, or even four, would generate another trillion dollars in tax revenues a year by 2030. Low growth, even with high taxes, will bring ever-greater deficits, while faster growth with lower taxes keeps the deficit largely under control, Swanson concludes.
To achieve growth of this scale, states have to target not one industry, but a broad array of endeavors. Expansion of one sector, such as high-tech, cannot generate enough jobs by itself to overcome lagging sectors; the impact of Silicon Valley’s recent expansion has done little to improve conditions in nearby
Oakland, much less in the rest of California.
Ultimately, only growth can overcome the new normal. Some states, such as Texas, Oklahoma, and North Dakota, appear to have already achieved this result. In large part, this has occurred by taking advantage of the energy and commodity boom as well as by expanding both manufacturing and technology-related jobs. In contrast, the growth of “green jobs” has remained far less than expected, suggesting that more traditional forms of energy production will remain paramount in the decade ahead.
How to leverage these sectors marks a major concern for both state and national governments. Potential environmental problems associated with energy and manufacturing growth need to be balanced with a concern for the role of these sectors in engendering a broad economic recovery. Almost all of the fast-growth states have been those that have managed to expand not only tech, but also manufacturing, energy, and business services.
Successful job growth strategies focus largely on the fact that most new jobs come from new and expanding businesses, not relocations. Places will have to generate more of their own opportunities. States also need to concentrate on attracting skilled and educated workers, many of whom work in the “1099” economy of self-employed professionals.
Particularly critical will be an increased focus on fostering workers' scientific and technical skills. These fields tend to offer far better employment prospects than the humanities and social sciences. Many states have taken aggressive steps to augment migration gains with programs to train local workers for middle- and higher-wage jobs associated with such things as high-end manufacturing. States with lower population growth, in contrast, have often been forced to cut back their educational and training programs.