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Losing Our Mojo

Time for some economic Viagra

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There's one sure way to test whether Charlotte still has the momentum it takes to become a big, bustling, world-class city: new businesses will want to locate here, and with them, they'll bring new jobs. If you've heard the giddy announcements by the Charlotte Chamber over the last two months that Charlotte-Mecklenburg's economy is picking up steam, you probably think things are just peachy. And they are, if you're selective about which set of facts you publicize, as the Chamber is; or which set you print, as is the Charlotte Observer. In January, the Chamber announced that local businesses had created 12,025 new jobs in 2002, some 26 percent more than were created in 2001. It was a sign, the Chamber said, that our economy is regaining momentum. They're right -- if you compare Charlotte-Mecklenburg's 2002 rate of job creation to 2001. The same goes for the number of new businesses moving here. Compared to the 676 new firms that opened their doors here in 2001, the location of 692 new firms here in 2002 was an improvement.

But that's hardly the whole picture. To get that, you have to click on the "Ten-Year Growth of New Business" section on the Chamber's website, which isn't as accessible as the group's PR outlet, i.e., the daily paper. The chart shows a fairly steady trend of growth that peaked in 1994 -- when 1,052 new firms opened their doors here -- and has been steadily declining until 2002's little bump.

You probably won't read about this trend elsewhere, but that doesn't make it any less real. In 1994 and 1996, the number of new businesses that moved here hovered around 1,000. Despite the booming national economy of the mid-to-late 1990s, over the last six years, the number of new firms opening for business here annually gradually fell into the 900s, the 800s, the 700s and now the 600s. For comparison's sake, the last time the number of new business announcements was this low was pre-1992 (751 new businesses opened in 1992.)

The number of new jobs in 2002 -- jobs created by the opening of new businesses rather than the expansion of existing ones -- was 5,612. That's better than the 4,709 created in 2001, but again, the last time the new job number fell that low was in the pre-1992 era. By comparison, between 1996 and 2000, new job creation hovered between 8,200 and 9,100 jobs a year.

These numbers paint something of a fuzzy picture of what's going on here because the number of jobs lost or businesses that moved or closed their doors aren't figured in, so whether we're getting ahead or merely treading water is impossible to tell. For instance, when a dentist's office that's bursting at the seams changes locations and expands by adding four more positions, the closing of its old location isn't counted in the Chamber's new and expanded business total, but the opening of the new location is. The fact that two positions were eliminated before four more were created isn't either.

The Chamber's figures on the types of jobs created and businesses expanded in Charlotte-Mecklenburg covers just about everything from the dishwashers at the Cheesecake Factory to the computer programmer at a new small-sized corporation.

What does all of this mean? I'm no economics expert, but I can spot a trend that would be obvious to a sixth-grader. The number of firms moving here annually has been dropping by an average of about 100 every two years. If this trend continues, growth will stagnate or even become negative, if it hasn't already, if businesses continue their natural trend of closing their doors or relocating from Charlotte as well.

This isn't merely an annoying fact I bring up to jab our so-called leaders. This is a big deal. Now that we're through fiddling with a new arena for the NBA, acknowledging that this trend exists and dealing with it should be the number one priority of all our elected and civic leaders. Nothing is more important.

It's not just a matter of being world-class. It's about the value of our homes and the tax dollars these businesses pay, which are hard to make up once they leave. The bottom line is simple. The number one concern of businesses considering a move is the state and local tax rate. Businesses will only move in large numbers to what has become one of the highest-tax areas in the Southeast if those taxes result in quality public education, reasonable drives to work and home values that escalate. Business leaders will not pay extra in personal and business taxes to live here and then stomach the cost of sending their children to private school or sitting in traffic on top of it. Why should they, when there are so many other places where they wouldn't have to? Sure, that sounds elitist, but when businesses don't open their doors here, they don't pay tax bills here and the public schools don't benefit. Nor do our citizens benefit from a competitive job market.

The time to attack this problem is now. The first step is acknowledging that it exists.

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