As Its Economy Shifts, Nebraska Looks for a Way Forward

With an unemployment rate hovering around 3 percent and solid economic growth in a number of key areas, Nebraska’s policymakers have good reason to keep an eye on how resources targeted at job creation get utilized.

Nathan Kauffman, an assistant vice president and Omaha branch executive with the Federal Reserve Bank of Kansas City, last month gave a largely positive analysis of the Cornhusker State’s economic footing, specifically pointing out that real estate is doing well, labor participation is among the highest in the nation and wages are on the rise.

However, according to a report in the Scottsbluff Star-Herald, the devil is in the details. Kauffman told the audience that most of the state’s job growth tends to be service-oriented, far outpacing goods-producing occupations, which often tend to offer higher wages.

“On the goods-producing side, there has been a considerable softening,” Kauffman said, according to the Star-Herald report, adding that Nebraska’s agricultural economy has also been in a downturn since around 2013.

Given the rise of the service economy, Nebraska’s policymakers and economic development professionals might have good reason to heed the advice of a recent state-commissioned study suggesting that the state focus its efforts and resources on attracting high-wage jobs that require a highly-skilled workforce.

The Omaha World-Herald laid out the details of the study earlier this month.

“It’s hard to recruit people if you don’t have competitive wages,” Courtney Dentlinger, director of the Nebraska Department of Economic Development, told the World-Herald. “We really need to focus in growing jobs in those areas, and help our citizens increase their standard of living.”

Nebraska's Advantage Act offers a wide variety of options for employers looking to locate or grow in the Cornhusker State.

The Nebraska report emphasizing job quality over quantity also comes at a time when state officials have some reason to express concern over employment in the state and how best to proceed with economic development policy.  

Cabela's, a big-box chain of outdoor recreation stores headquartered in the state, now finds itself the target of a takeover bid from rival Bass Pro Shops and investment banking firm Goldman Sachs, according to Reuters.

Cabela's employs around 2,000 people in Nebraska, according to a report on Omaha.com.

Given the strong local impacts that drive policy, how one state or municipality deploys its economic development resources never really makes for a one-to-one comparison. But it's worth noting that the strategies outlined in the Nebraska study differ greatly from other recent high-profile attraction efforts.

The Commonwealth of Massachusetts and the city of Boston, for instance, have made headlines in recent months for the complex deal that got Connecticut-based General Electric to opt in favor of relocating its corporate headquarters in the city.

In April, Boston.com went to great lengths to outline the "complex and still fairly unclear" package of incentives that lured the multinational corporation. G.E. got direct tax breaks from the city while the state offered grants for infrastructure improvements and support for the physical building.

At the end of negotiations G.E. got $25 million in property tax breaks over a span of 20 years, however the city will still pocket a sizable amount of revenue, per the Boston.com report. The headquarters could employ about 800 people in various job functions.

To be sure, a large corporate headquarters in Boston offers myriad tangible and intangible benefits for the various stakeholders, particularly from a recruitment standpoint. The company pointed to Boston's proximity to top academic institutions and growing technology sector as major drivers for the location decision, according to The Boston Globe.

“We want to be at the center of an ecosystem that shares our aspirations,” G.E. CEO Jeffrey Immelt told the Globe in a statement.

There's little doubt that the strategies and policy decisions for economic development made by states like Massachusetts and Nebraska differ considerably. The long-term benefits of a city like Boston gaining the headquarters of General Electric remain to be seen but in the short term the move generates headlines and puts a focus on what the region has to offer.

Similarly, it's unknown if rural Nebraska will lose one of its large employers in Cabela's and just what that could mean.

However, a February report from the Washington, D.C.-based Center on Budget and Policy Priorities leaves little to the imagination in terms of which strategy it prefers.  

"To create jobs and build strong economies, states should focus on producing more home-grown entrepreneurs and on helping startups and young, fast-growing firms already located in the state to survive and to grow―not on cutting taxes and trying to lure businesses from other states," the report says.

The CBPP report's authors conclude that focusing on the method often known as 'economic gardening,' or focusing on the jobs and companies you already have, as opposed to 'hunting,' contributes to "80 percent of total job creation in every state."