If You Build It They Will Come. But Where Will They Live?

This week’s Courier Herald column:

Georgia has been building a fortress economy since coming out of the great recession.  “The number one state to do business” is as much of a mission statement as it is a ranking. 

The formula is quite public and relatively simple on the surface.  The state begins by ensuring a relatively lost cost of doing business, which involves more than just taxes.  This includes available land, labor, cost of health care, energy, and infrastructure.  Regulation is limited to what is needed, rather than an attempt by government to micromanage private enterprise to meet the whims of popular opinion.

On top of that, the state offers incentives for businesses to relocate here, or to grow their existing operations.  The vast majority of these “costs” are abatements of future taxes that wouldn’t be paid if the organization receiving the benefits didn’t locate here or grow here. 

The actual state dollars invested usually fall into two categories.  Infrastructure improvement costs are often shared by the state and or local governments.  This includes things like adding an interchange to accommodate truck access to freeways without impeding existing traffic patterns, or extending rail lines or utilities to serve large development sites.

The other category is something that the state already spends about half of its annual tax dollars on, which is education.  Our largest deals usually involve a dedicated training center to ensure workers in the area have specialized skills needed by the employers.  As the number of people in the workforce has dropped significantly since the pandemic, the ability to supply a qualified workforce is a decided edge in the race for economic development.

The state then refines our pitch to the opportunities that the market provides, and matches that to the resources we have.  Governor Deal was instrumental in meeting the need of employers with a high demand career initiative, providing tuition to our technical colleges if students would study career fields most in demand by employers.  His administration also took steps to seize the opportunity to grow Georgia’s technology employment base, which has been especially helpful to metro Atlanta but also helped communities with large tech employers in Augusta and Columbus.

Governor Brian Kemp has taken this foundation and expanded it deep into rural Georgia.  A relationship with the automobile industry and South Korea which began under Governor Sonny Perdue has yielded plans for two new giant automobile factories, and additional battery suppliers for the emerging EV industry.  It seems we’re announcing hundreds of new jobs for suppliers of these factories weekly.

Seizing this opportunity has been a boon for the economic development efforts in rural Georgia.  Last year, 85% of the jobs and 92% of the investments announced by Georgia’s Department of Economic Development have been outside the 10-county metro Atlanta area.

This hyper-focus on rural Georgia has been a boon for parts of the state that have felt long forgotten and left behind in Georgia’s economic growth and prosperity.  With this opportunity comes new challenges.  Managing success has an entirely different solution matrix than solving the initial problem.

Much of rural Georgia has not experienced population growth in decades.  In a tight labor market, landing an employer with hundreds or even thousands of new jobs means the workers have to come from…somewhere.

The housing industry has been greatly transformed since the real estate bubble burst a decade and a half ago.  We went from oversupplied in housing – mostly in metro areas – to undersupplied in less than two decades. 

We’re now attempting to put hundreds of people in smaller communities who haven’t seen significant growth in population or housing in decades, if not a century.  The growing pains associated with Georgia’s success have attention at the highest levels of the state.

At the Eggs and Issues breakfast hosted by the Georgia Chamber of Commerce – an event that usually telegraphs policy initiatives for the year’s session of the legislature – Governor Kemp brought up the need for additional workforce housing.  The State’s economist – Dr. Jeffrey Dorfman – went into detail during his presentation on current and future tax revenues that available housing would become a constraint on growth.

In the State of the State address, Governor Kemp again addressed “the need for more workers, and quality homes where they can raise a family in the same community where they work.”  His proposal includes money for a “rural workforce housing fund”, which would work with local governments to find solutions to this growing problem of workforce housing.

This is an issue that has many facets, and won’t be solved by one bill or during one legislative session. It deserves the attention it is getting at the highest levels of the state, as well as at the most local levels of government.  As such, consider this a primer for an ongoing discussion on this topic.

Georgia has rebuilt its economy.  We must now put as much thought into building the homes for our workers as we do in finding sites for their employers.