There’s a saying in the insurance business: “Grow with those we know.” It means when you are out looking for new business, always think of your existing customers first. I think this is a good concept that we need to apply to job creation here in Alabama.
Many of our state’s leaders have been touting a declining unemployment rate, even though it really isn’t declining. While our unemployment rate has gone down some, we also have fewer people actively in the workforce now. When the labor force shrinks, so does the unemployment rate.
This point was made recently in an article on AL.com that noted how workers are leaving the workforce, while the jobs we are creating are low skill, low wage jobs that often cannot provide for a family. The jobs we are creating are mostly in the service sector at the lower end of the pay scale, primarily in the hospitality sector. While these kinds of jobs can drive down the unemployment rate, they will not grow our economy or relieve the financial burden on families.
Economists cited in the AL.com report are divided as to the cause of Alabamians leaving the workforce. But many argued it is because of an education deficit. Without a higher level of education, many Alabamians are having a difficult time finding work that pays a livable wage, much less begin a new career. Better education means workers will be more qualified. That, in turn, means more good-paying jobs for the people of Alabama.
But another problem is our strategy on job creation.
When it comes to job creation, Alabama is a beggar state. Our method of choice is to offer huge tax breaks to out-of-state businesses in order to lure them here. And so far, the only changes to that strategy that is being proposed involves the way we recruit out-of-state businesses to Alabama.
While I am all for using tax incentives to bring in new business, provided we do it the right way, we also need to focus on growing existing business and industry. We need to “grow with those we know.”
That means first focusing on keeping the jobs we have here by making our schools better. This will attract growth within the companies already invested in Alabama, which saves jobs and creates new ones.
But there is also work we can do to help existing industries grow, particularly in the field of medical research.
Many states that have booming industry also limit non-compete clauses. Non-compete clauses are meant to protect trade secrets. But they also have the unwanted effect of limiting growth. The law should protect trade secrets and proprietary knowledge. But employees should also be free to leave their current employer and form their own business in the same industry if they want to.
For example, why are so many technology companies based in Silicon Valley in California? It’s because people who started out working at places like Microsoft and Apple later left those companies to form their own businesses. Protecting employees from overly strict non-compete clauses allowed that industry to thrive. We can do the same here in Alabama. Our medical research industry, in particular, could benefit from similar protections.
There will always be a place for creating new industry and recruiting new business. It is extremely important to the function of our economy. But we also cannot lose sight of job retention. We need to focus on keeping the jobs that are already here, here. We need to create a culture for those companies and industries to expand, thus protecting and creating more jobs.
And if we continue to focus primarily on tax incentives that are only given to new industries and out-of-state businesses, then we need a system of checks and balances to make sure that we can recoup our money if they don’t meet a job creation requirement.
And we need to level the playing field so that out-of-state companies aren’t being taxed at a lower rate than in-state companies. For example, we must protect our independent pharmacies, they are small businesses born and bred here in the state of Alabama. However, right now, instead of protecting them, we protect the out-of-state large corporate pharmacies by giving them tax breaks to open locations, putting the mom and pop pharmacies out of business.
Yes, the state of Alabama needs to be “open for business.” We need to create more, lasting, quality jobs. But almost as importantly, we need to retain the jobs we currently have, grow the businesses and industries that are already here and protect our small business owners. We need to grow with the ones we already know.
Rep. Craig Ford is a Democrat from Gadsden and the Minority Leader in the Alabama House of Representatives.
