The RealtyTrac foreclosure report for the first quarter of 2008 is out. It shows foreclosures increasing more than 23% nationwide as compared to the fourth quarter of 2007, and a disturbing 112% year-over-year increase from the first quarter of 2007.

RealtyTrac CEO James J. Saccacio says in the report that "Foreclosure activity in the first quarter increased on a year-over-year basis in 46 out of the 50 states and in 90 of the nation’s 100 largest metro areas, demonstrating that most regions of the country are seeing more foreclosures."

Florida was fourth highest on the list with one foreclosure per 97 households, double the national rate. There were 87,893 foreclosures in Florida, a 178% increase over the first quarter of 2007 and a 17% increase over the fourth quarter of 2007. Georgia was sixth on the list, with one foreclosure per 136 households. Tennessee was number thirteen, with one foreclosure per 216 households.

The total number of foreclosures in Southern states including Texas was 197,425. The average percentage increase in foreclosures was 30% from Q4 2008, and 108% year-over-year from Q1 2007.

States with the lowest rate of foreclosure were West Virginia, Mississippi, Alabama, Kentucky, and South Carolina. All of those states, however, saw an increase from Q4 2007 except Mississippi, which had a reduction of -7.66%.

In related news, nationwide home vacancies hit a new record of 18.6 million unoccupied homes, or 2.9% which is the highest number on record since 1956. Analysts say foreclosures are a factor, but so are falling prices, which are making buyers wait for the market to bottom out. According to the Bloomberg report, Fannie Mae says home prices may decline up to 5.8% in 2008, the most on record.

Labels: economy, foreclosure

The Bureau of Labor Statistics has released unemployment figures for March 2008. Since March 2007, unemployment has increased by more than 11% around the South, from an overall average of 4.5% to 5.0%.

Florida, Georgia, and Tennessee had the highest increases in unemployment. Virginia also had a large increase percentage-wise, but the unemployment rate remains significantly lower than the region.

Mississippi saw a 6.3% reduction in the unemployment rate, but theirs remains the highest in the region. Arkansas reduced unemployment to just below the regional average.

The good news is that unemployment in the South is slightly lower than the overall U.S. unemployment rate of 5.1%.

Unemployment	Mar 2007	Mar 2008	Change	% Change
Alabama	3.4%	4.1%	0.7%	20.6%
Arkansas	5.3%	4.9%	-0.4%	-7.5%
Florida	3.7%	4.9%	1.2%	32.4%
Georgia	4.2%	5.3%	1.1%	26.2%
Kentucky	5.6%	5.7%	0.1%	1.8%
Louisiana	3.9%	4.5%	0.6%	15.4%
Mississippi	6.4%	6.0%	-0.4%	-6.3%
North Carolina	4.5%	5.2%	0.7%	15.6%
South Carolina	5.7%	5.7%	0.0%	0.0%
Tennessee	4.5%	5.6%	1.1%	24.4%
Virginia	2.9%	3.7%	0.8%	27.6%
West Virginia	4.4%	4.7%	0.3%	6.8%
Region Average	4.5%	5.0%	0.5%	11.1%

Just out of curiosity, we looked at the percentage of employees with union representation as reported by the BLS:

Union representation	2000	2007	Change	% Change
Alabama	10.5%	10.6%	0.1%	1.0%
Arkansas	6.8%	6.5%	-0.3%	-4.4%
Florida	8.7%	7.3%	-1.4%	-16.1%
Georgia	7.5%	5.4%	-2.1%	-28.0%
Kentucky	13.8%	11.1%	-2.7%	-19.6%
Louisiana	9.3%	6.5%	-2.8%	-30.1%
Mississippi	9.6%	8.9%	-0.7%	-7.3%
North Carolina	4.8%	3.9%	-0.9%	-18.8%
South Carolina	5.2%	5.9%	0.7%	13.5%
Tennessee	10.3%	6.4%	-3.9%	-37.9%
Virginia	7.4%	4.8%	-2.6%	-35.1%
West Virginia	15.6%	14.7%	-0.9%	-5.8%

Note that with few exceptions, the states with the largest decline in union representation from 2000 to 2007 also have a corresponding higher increase in unemployment. There are obviously many other factors (overall loss of manufacturing jobs v. new auto manufacturing jobs that are typically union, etc.). Correlating unemployment to declining union representation is beyond the scope of this report, but it's interesting and perhaps worth exploring.

Labels: economy, jobs

The business news is awash with panic today, what with financial stalwart Bear Stearns avoiding bankruptcy only by being gobbled up by J.P Morgan.

The five-alarm headlines may be a bit much: as Houston blogger Bonddad notes, "the markets are actually holding up pretty well." But there are other signs that fundamental problems in the economy are hurting the very ability of states to govern.

Today, the New York Times picks up on something we reported almost a month ago -- increasingly gloomy economic forecasts facing governors and state legislators. Thanks largely to plunging tax revenues, 25 states are anticipating shortfalls for fiscal year 2009 -- putting key programs and projects at risk:

Florida has seen its sales tax revenue decline for two straight fiscal years, the first time officials there recall that happening, the result of a collapsing housing market that has homeowners spending less. The state, which has no income tax, relies heavily on sales taxes for its state programs. [...]

Kentucky has its largest budget crisis in state history, sparked by the movement of manufacturing jobs overseas. [...]

To help close a $600 million budget gap in Virginia, the state made hundreds of thousands of dollars in cuts at universities, including dorm cleaning staff, library budgets and graduate assistantships. (The governor [Democrat Tim Kaine] wrote the state a check, giving back 5 percent of his salary, to help balance the books.)

The broader economic downturn may be out of the control of state lawmakers -- but it thrusts them into the difficult position of having to slash programs or raise taxes, both especially hard in an election year.

Labels: bear stearns, economy, financial markets, Florida, kentucky, state politics, virginia

Today's job report coming out of the Bureau of Labor Statistics has some grim news: for the first time in eight five years*, the country has seen two straight months of job losses. The net job loss for February was 22,000.

The BLS statistics show (pdf) that the downturn was driven by job losses in manufacturing, where nearly 300,000 jobs have been lost over the last year. 83% of the job losses in February alone were in manufacturing:

Manufacturing employment continued to decline in February (-52,000), bringing losses over the past 12 months to 299,000. Most of the February decline was concentrated in durable goods manufacturing, as motor vehicles and parts (-13,000), furniture and related products (-6,000), and wood products (-5,000) lost jobs. Within nondurable goods, employment fell in printing and related support activities (-5,000).

Manufacturing job losses are hammering the Midwest especially hard, but parts of the South are feeling it, too.

A report released this week by Manufacturer's News found that North Carolina -- which ranks #1 in the South for share of jobs in manufacturing, and ninth nationally -- has been devastated by industrial job losses:

North Carolina’s industrial employment fell 2.3 percent, or by 16,052 jobs, in 2007 [...] The state lost 8,798 industrial jobs in 2006. [...]

North Carolina lost 10 percent of its apparel and textile jobs, or 9,716, during 2007.

North Carolina has gained jobs elsewhere, so the overall unemployment rate has only edged upwards. But the relentless assault on the state's manufacturing base points to a deepening divide between "the two North Carolinas" -- the parts of the state that are moving economically forward, and those that are falling desperately behind.

[* thanks to reader oyster for correcting us in the comments]

Labels: bureau of labor statistics, economy, jobs, north carolina

Pundits are working themselves into a dither about whether the U.S. is or isn't officially "in a recession." But for at least one segment of the country, the question is settled: African-Americans are deep in recession, and have been for a while.

In fact, black America is in what should be called a permanent recession.

In January, economist Algernon Austin at the Economic Policy Institute pointed out that even in good times, huge numbers of African-Americans are being left behind:

In the best of times, many African American communities are forced to tolerate levels of unemployment unseen in most white communities. The 2001 recession pushed the white annual unemployment rate up from a low of 3.5% in 2000 to a high of 5.2% in 2003. During the same period, the black unemployment rate shot up from 7.6% to 10.8%.

But the reality of inequality is too often left out of the equation. For example, USA Today ran a feature this week -- "Is your state in a recession?" -- which found that many parts of the country aren't in a recession, and are actually growing.

But is everyone benefiting? USA Today made no reference to another study released this week by the Urban League, which found inequality is stubbornly persistent:

Across a range of economic indicators including measures of employment, poverty, housing, income and wealth, blacks were much worse off than whites. If whites scored 100 percent on such measures, blacks scored just 56.8 percent, a figure unchanged from last year, the National Urban League said. [...]

Three times as many U.S. blacks as whites live below the poverty line, defined as an income of $20,000 for a family of four. The disparity between the races on unemployment narrowed slightly, but blacks were still twice as likely to be jobless.

Inequality is a South-wide story: as we recently reported, 11 of the 15 states with the highest poverty levels are in the South.

Labels: economic policy institute, economy, national urban league, poverty, race and racism, recession

In a telling follow-up to my last post on states slashing budgets to trim deficits, Jordan Green at YES! Weekly in Greensboro, NC has an excellent piece of reporting on what happens to workers who get stiffed by their employers.

Despite a growing number of workers being laid off or fired without receiving proper pay, the N.C. Department of Labor Wage and Hour Bureau is cutting back, making only two attempts to collect from the employer before telling the empty-handed workers the case is "unresolved":

"Because of personnel turnover we couldn't keep up with the inventory, so we modified to limited services procedures to where we were making two attempts to contact, and then making a decision of how to proceed," said Jim Taylor, the state's wage and hour administrator. "And if we didn't get voluntary payment in most cases, it was referred back to the complainant."

The Wage and Hour Bureau is stretched thin, Taylor said. Claims for nonpayment of wages are up at a time when longtime investigators are retiring, less experienced employees are seeking better pay in the private sector and the bureau is generally suffering from high turnover.

[T]he number of cases [of North Carolina employers not paying workers] open more than doubled from 722 in fiscal year 2005 to 1,961 in fiscal year 2006. Caseload currently hovers at around 1,200. The cost incurred by the bureau's limited-service mode has been a decline in the share of cases resolved with a factual determination from 62.2 to 55.8 percent from 2005 to 2007, while cases closed with no response from the employer skyrocketed from 1.9 to 16.1 percent over the same period.

Green also reports that the bureau is currently "opting to not use an enforcement statute" that would compel deadbeat employers to turn over records, "nor does the bureau have sufficient staff to conduct onsite investigations."

Labels: economics, economy, jordan green, north carolina, Work and Community

According to a new report by the National Bankruptcy Research Center, Tennessee, Georgia, and Alabama have the top three highest bankruptcy rates in the nation. Arkansas, Mississippi, and Kentucky round out the top ten.

According to the Atlanta Journal Constitution, the number of bankruptcy filings in 2007 increased 40% nationwide. Factors cited include people trying to save their homes from foreclosure, small business failures, and staggering medical debt.

Labels: economy

Yesterday the U.S. House of Representatives passed the Energy Independence and Security Act (H.R. 6), a wide-ranging measure that promotes renewable energy sources, improves automotive fuel economy and boosts production of homegrown biofuels. According to the Southern Alliance for Clean Energy, the measure would also benefit the South's economy.

"A very important measure in this bill is the 15 percent renewable electricity standard for utilities that will dramatically increase renewable sources of electricity," says SACE Executive Director Stephen Smith. "We are pleased to see that the House has rejected the false assumptions that the Southeast does not have renewable energy potential, and the Southern Alliance for Clean Energy’s analysis shows that this standard will significantly boost clean energy production in our region."

The Southeast has abundant renewable energy potential, but the region has lacked economic incentives to encourage renewable energy production and stimulate job growth, Smith says. This measure provides those incentives.

The legislation offers a $21 billion tax package providing renewable energy incentives that it pays for by repealing oil and gas industry tax breaks and extending production tax credits for cellulosic fuels and renewable energy sources including wind and solar power. It also requires cars and light trucks sold in the U.S. to achieve a minimum fleetwide average of 35 miles per gallon by 2020 -- the first congressionally mandated increase in corporate average fuel economy standards since 1975.

In addition, the bill imposes a five-fold increase in the biofuels mandate, requiring that 36 billion gallons of ethanol and other biofuels be blended with gasoline by 2022. That measure is controversial among some environmental advocates such as the folks at the Energy Justice Network, who warn that such a dramatic expansion in biofuels production and use will prove catastrophic for food prices, agriculture, water and soil depletion, food security, and deforestation, and would even worsen air quality and global warming. For their take on the problems with ethanol, click here.

The bill has moved to the Senate, where Republicans today blocked a vote on the measure, forcing negotiations that will likely result in a scaled-down version. Senate Minority Leader Mitch McConnell (R-Ky.) criticized the House-approved version as "a massive tax hike, and a utility rate increase for consumers across the southeast." Meanwhile, President Bush has threatened to veto anything resembling the House version.

For more details on the legislation, visit the Union of Concerned Scientists' Energy Bill Resource Center.

Labels: economy, energy policy, politics

Good Jobs First, a "national policy resource center for grassroots groups and public officials, promoting corporate and government accountability in economic development and smart growth for working families" has compiled a report entitled The State of State Disclosure which evaluates "online public information about economic development subsidies, procurement contracts and lobbying activities."

Scores from around the South were somewhat disappointing, except North Carolina which placed 9th with a grade of 'C'. Kentucky was ranked as the next best Southern state in 23rd place with a grade of 'D-'. Every other Southern state received a failing grade of 'F'. No state received an 'A' grading.

But is this necessarily a bad thing? In the low-tax, cash-strapped Southern states, which consistently rank at the top in poverty rates and the bottom in education and health care, there are probably better things to spend money on than fancy websites. Besides, it just gives the anti-tax activists and conservative right-wing bloggers something to do in their spare time, looking for wasteful spending on projects such as pre-K programs and winter home heating assistance for the elderly and poor.

On the other hand, government must be accountable to the people. The internet and technology in general have created new opportunities for transparency, not just for journalists and the media but for everyday citizens and taxpayers. Which is likely one reason politicians in most states don't want to fund it. And it shouldn't cost that much. Most if not all of this data is already in one electronic form or another.

As Good Jobs First says in the report's Executive Summary:

Transparency in key aspects of state government is improving, but there are still wide variations in the degree to which states are making full use of the Internet to disseminate information to the public. Only a few states have created high-quality disclosure systems, while many more seem to be resisting the great degree of openness that the Web makes possible.

[..]

More transparency on spending is a positive development, but there is also a need for greater disclosure about other key areas of interaction between government and the private sector -- for example, information about which companies are getting special tax breaks and direct financial assistance from state agencies and which companies are spending money to exert influence over state policymaking.

And even progressives for good government will agree with anti-tax activists that waste and fraud must be weeded out at all levels of government. For Exhibit A, just look to the work by our hosts here at the Institute for Southern Studies and their Gulf Coast Reconstruction Watch project.

The Good Jobs First study focused on online disclosure of subsidies, procurement contracts, and lobbying. State disclosure websites in each of these areas were evaluated according to criteria such as ease of finding the website, searchability, level of detail, thoroughness, and the depth and currency of the data.

The Executive Summary notes that fewer than half the states provide online information about economic development subsidies and that most states do better on procurement contract disclosure with lobbying information not far behind.

Around the South, Alabama, Arkansas, Georgia, Louisiana, Mississippi, South Carolina, Tennessee, Virginia, and West Virginia all received a score of "zero" for disclosure of economic development subsidies. North Carolina did well with a score of 67%, as did Florida with a score of 61%. Kentucky earned a score of 45%.

The South scored better in the procurement contract disclosure category. All had scores of 80% or more except West Virginia with a respectable 71% and Kentucky at 57%.

In the lobbying disclosure category, results were mixed. Florida and Georgia scored well at 89%, as did Mississippi and Kentucky at 83% and Louisiana, North Carolina, Tennessee, and Virginia at 78%. States with room for improvement include Alabama (39%), Arkansas (56%), and West Virginia (39%).

The Executive Summary concludes:

...more than a decade after the Internet gained broad popular use, it is discouraging to find so many states still resisting online disclosure entirely when it comes to subsidies, and numerous others settling for obscure sites with incomplete data when it comes to procurement and lobbying. We commend the disclosure leaders and urge the laggards to emulate them.

For the full findings with state-by-state details and links to all state disclosure websites (where availalbe), visit the Good Jobs First State Disclosure Page.

Labels: contracting, economy, money and politics, regulatory oversight

Citing concerns about investments in sub-prime mortgage backed securities, Florida local governments have withdrawn billions of dollars from a State of Florida investment fund, including withdrawals of $3.5 billion in one day. The run on the State Board of Administration operated Local Government Investment Pool has resulted in a freeze on withdrawals from the fund.

The Orlando Sentinel reports:

The State Board of Administration -- the governor, attorney general and chief financial officers -- voted unanimously to at least temporarily halt a run on the fund, which has reported withdrawals totaling $10 billion in the past several weeks. That's more than one-third of the fund's assets of $28 billion.

This could put local governments who "park" money in the investment pool in a bind:

Alarmed local officials said the move by the SBA could jeopardize local governments' payrolls, if they are not able to take money out of the fund to pay employees.

The freeze on withdrawals may be partly in reaction to a Bloomberg report yesterday that said the fund had invested $2 billion in "sub-prime tainted debt" and that $900 million (5%) of the fund's asset-backed securities were in default. The article noted that Orange County (Orlando) had withdrawn its entire $370 million from the fund. Pinellas County (St. Petersburg/Clearwater) withdrew its entire $300 million, and Miami-Dade County and Pompano Beach have also withdrawn funds.

The Florida State Board of Administration responded with a "recommendation to the Board of Trustees to formally adopt a plan to provide investors in the Local Government Investment Pool (Pool) with assurance that the Pool will continue to provide safety of principal in the midst of an unprecedented absence of market liquidity."

The plan would seek protection from default for $1.5 billion in securities, including securities issued by Countrywide Mortgage, and restructure the plan to be "more liquid and conservative."

The Florida SBA also noted that the Bloomberg article was incorrect with regard to securities being in default:

"It is important that every investor in the Pool has an accurate understanding of the facts regarding our holdings, not misinformation" said Stipanovich. A November 28, 2007 article by Bloomberg News erroneously stated that: "The Florida pool's $900 million of defaulted asset-backed commercial paper now amounts to almost 5 percent of its holdings." In fact, certain Pool investments have been downgraded below purchase credit rating guidelines, but they have continued to pay principal and interest. The Pool has collected approximately $64 million in principal and interest payments since August on these downgraded investments.

Earlier in the month, the FSBA issued a report entitled "Update on Sub-Prime Mortgage Meltdown and State Board of Administration Investments" which outlined the sub-prime exposure of the various funds managed by the FSBA. The report states:

The SBA can take pride in the fact that its investments have held up well through periods of financial crisis and economic downturns. This report lays out our current exposures and responses to date dealing with the sub-prime meltdown. Although past performance is no guarantee of future results, and the financial environment may become even more challenging, we believe the SBA is positioned to deal with the current financial stress at least as well as we have with prior events."

One of the funds managed by the SBA is the Florida Retirement System Pension Plan.

An expert contacted by Bloomberg stated:

Should the withdrawals continue, Florida's [Local Government Investment Pool] may have to consider filing for bankruptcy protection, says John Coffee, a securities law professor at Columbia Law School in New York. "A bankruptcy could handle these kinds of problems if they feel they'll become insolvent," he said.

Coffee predicts the pool will likely file lawsuits to recover losses. "I'd expect the pool is going to sue the people who sold them the commercial paper, saying the risks were hidden," he said.

Lehman Brothers Holdings Inc. sold Florida most of its now- default-rated asset-backed commercial paper. Lehman spokesman Randall Whitestone declined to comment.

Bloomberg also quotes Joseph Mason, professor of finance at Drexel University:

"The first people in the withdrawal line get 100 percent of their money,'' he said. "The loss is suffered by the people behind them in line. Since nobody wants to be at the end, you get a run on the pool."

Mason says while the state of Florida has a moral duty to cover any losses suffered by the pool participants, its own shaky finances will make that difficult. The fourth most- populous state, hurt by the housing slump, cut its revenue projections by 3.9 percent for the fiscal year ending June 30, and 5.2 percent for the following year.

"The state appears to have breached the trust of the investors by putting money in new kinds of debt its managers didn't fully understand, in their search for higher yields," Mason said.

It sounds as though Florida local governments and taxpayers are the latest victims in the ongoing sub-prime lending scandal.

Labels: economy, Florida

Severe drought conditions -- the worst in more than a hundred years -- continue around the South, with widespread total crop losses reported in Alabama. Recent heavy rains reduced drought severity in some areas, and this six-week animiated map shows some improvement. But D2 (severe), D3 (extreme) and D4 (exceptional) drought conditions continue to affect areas in eight Southern states.

The drought is still centered over Northern Alabama, extending north up the Tennessee Valley through East Tennessee and into Southeastern Kentucky, into Georgia to the east and Mississippi to the west. According to the U.S. Drought Monitor, "The impact of the drought on farmers remains extremely serious, with Alabama corn still rated 88 percent poor to very poor, and soybeans at 85 percent poor or worse."

On Monday, the entire state of Alabama was declared a drought disaster area by the US Department of Agriculture. The New York Times reports that many farmers have gone through their cash reserves and are facing bankruptcy. Others are selling off cattle herds because there's nothing to feed them. A farmer's trade group director said "Nobody alive has ever seen it like this." The governors of Georgia and Alabama are calling for divine intervention through prayer.

Combined with the Easter Freeze, which damaged many fruit and vegetable crops, the drought is shaping up to be a widespread economic disaster for agriculture all over the South.

Labels: agriculture, Alabama, climate, economy

	Q1 2007	Q1 2006	% INCR
ExxonMobile	$9.280B	$8.400B	10%
Chevron	$4.715B	$3.996B	18%
ConocoPhillips	$3.546B	$3.291B	8%
National Avg. Regular	$3.191	$2.848	12%

Share prices (source: Yahoo Finance):

Labels: economy, energy policy

That's the question the folks over at Citizens for Tax Justice pondered recently on their Talking Taxes blog. Louisiana also tried to lure the German company's $3.7 billion steel plant, which instead will be built north of Mobile in the community of Mount Vernon.

The plant will employ 2,700 people and generate at least 38,000 indirect jobs in the region over the next 20 years, according to the company.

But as Talking Taxes points out, the cost to Alabama will be considerable: $461.1 million in direct financial aid, including land acquisition, site preparation, worker training and road improvements; and $350.3 million in "abatements of sales, property and utility taxes by state and local governments."

In addition, the steel giant won't have to pay any state income tax for the next 30 years unless its tax liability exceeds $185 million in any year -- pretty unlikely considering that the tax for the entire state brought in a total of only $484 million in fiscal year 2006.

Keep in mind that all this taxpayer-funded assistance is going to a company whose second-quarter earnings announced earlier this month were $769 million -- even after being hit with a $646 million fine by the European Union for its involvement in an illegal elevator cartel.

Talking Taxes concludes:

So if Louisianans are looking for consolation in the wake of "losing" this smokestack-chasing contest, try this on: maybe this is a race they couldn't have afforded to win. And maybe Alabama will find they can't afford it either.

Labels: Alabama, economy, jobs, louisiana

The South is among the regions of the United States hit hard by colony collapse disorder, in which large numbers of honeybees are dying off and disappearing, never to be seen again. The United States in recent months has lost about a quarter of its colonies, five times the typical winter losses.

The problem, which has also been documented in a number of European nations and Brazil, has enormous implications for food security and the economy, as bees pollinate more than 90 crops, including apples, soybeans, citrus fruit, peaches, blueberries and melons.

Some have blamed pesticides for poisoning the bees. Others have suggested that cell phone radiation could be disrupting the creatures' navigating systems. Yet others have pointed to a fungus.

But as Matt Hutaff notes in an article in The Simon, if pesticides or cell phones were the culprit, we would expect that the bee deaths would be a global phenomenon and would have happened years ago. CCD, on the other hand, was observed in recently months in isolated areas and then spread rapidly. Hutaff suggests another possible trigger: genetically modified crops. He observes:

Most genetically-modified seeds have a transplanted segment of DNA that creates a well-known bacterium, bacillus thuringiensis (Bt), in its cells. Normally Bt is not a problem -- it's a naturally-occurring pesticide that's been used as a spray for years by farmers looking to control crop damage from butterflies. And it's effective at helping beekeepers keep bees alive, too -- Bt is sprayed under hive lids to keep those pesky wax moths from attacking.

But "instead of the bacterial solution being sprayed on the plant, where it is eaten by the target insect, the genes that contain the insecticidal traits are incorporated into the genome of the farm crop," writes biologist and beekeeper John McDonald. "As the transformed plant grows, these Bt genes are replicated along with the plant genes so that each cell contains its own poison pill that kills the target insect.

Canadian beekeepers, for instances, have observed the disappearance of the wax moth even in hives not treated with Bt, presumably due to bees foraging in fields planted with transgenic crops. In addition, a trial of genetically modified crops in the Netherlands reportedly led to CCD in an area within about 60 miles of the test plantings.

It may not be only the transgenic nature of these crops that's to blame: Many seeds from which genetically modified crops are grown are first treated with systemic insecticides that may appear later in the plants' nectar and pollen, notes a University of Florida entomology researcher.

Grist magazine points out that CCD primarily afflicts large-scale bee operations that drive the hives across the country "chasing the bloom," with small-scale honey producers still relatively unscathed. Grist is skeptical that GM crops alone are to blame, speculating instead that a variety of factors -- including GM crops and pesticides -- may be compromising bees' immune systems, making them susceptible to whatever causes CCD. But the article ends on note both hopeful and practical:

The answer to this dire problem is delicious. Support your local foodshed -- and give extra-special love to your local honey producers.

Labels: agriculture, economy, environment

Is South Carolina shaping up to be the new-age-hipster Mecca of the South?

Last week, Google announced plans to build a gigantic server farm in Goose Creek near Charleston SC, and has applied for permits for another facility near Columbia.

This week, Starbucks announced plans for a new roasting and distribution facility in Calhoun County near Columbia SC.

Dedicated Google employees are known for their hard work and long hours. Speculation is that Starbucks saw a potentially huge demand for its products and is positioning itself to fill it.

All South Carolina needs now is a Ben & Jerry's factory and an IKEA distribution center and half of Seattle will want to move down there.

But seriously, these announcements again highlight the "corporate welfare" aspects of the incentives used to lure new employers to the South, but may also be good news for South Carolina in the long run.

Google's $600 million Goose Creek facility will employ about 200 workers at an average annual salary of $48,000 and an impressive array of benefits according to state officials.

A couple of weeks ago we talked about the "new economy of the Old South" and a recent report that looks at "new economy" jobs and cautions against old-school incentives designed to attract manufacturing jobs of the "old economy."

The report defines the "new economy" as having the following attributes:

- Today’s economy is knowledge dependent.
- Today’s economy is global.
- Today’s economy is entrepreneurial.
- Today’s economy is rooted in information technology.
- Today’s economy is driven by innovation.

By any measure, Google fits all these criteria to a "T". So that's a good thing for South Carolina. Google was said to be attracted to SC because of the availability of cheap electricity, abundant water (which they need for cooling towers for their server farms) and access to fiber optic networking connections.

Incentives were an attraction, too. Details are sketchy, but some that have been mentioned include $4.8 million in tax credits for job creation, tax-free electricity, and elimination of taxes on capital investments -- "exemptions that have traditionally been offered to large old-line manufacturers." Google could also qualify for other incentives if they double their payroll, and they have purchased enough land to accommodate future expansion to 400 employees.

Google's standard-issue incentive package, however, does not follow the recommendations of the "new economy" report referenced earlier. Instead of job creation credits, the report recommends that states "align incentives behind innovation economy fundamentals", which means tying incentives to specific state goals that support the "building blocks of knowledge, innovation, and entrepreneurship." The report also recommends rethinking incentives to accomplish such things as making them contingent on higher wages, targeting distressed areas of the state and enhancing "key industrial centers."

However, because of the nature of Google's business the incentives may, in a roundabout way, promote "innovation economy fundamentals", and it could be the start of a South Carolina IT "industrial center." So that's a good thing for South Carolina, too.

Another interesting aspect of Google's deal with South Carolina involves their simultaneous negotiations with North Carolina for a similar facility and how they pitted the two states against each other to bid up their respective incentive packages while planning to build all the facilities all along. Or, as this editorial puts it, "For a company whose motto is 'Don't be evil,' Google indulged in some nigh-unto-devilish behavior in seeking economic development incentives for its planned computer data center near Lenoir, N.C."

The total value of the South Carolina incentive package is not yet known, but the North Carolina package may be worth up to $260 million over thirty years for 210 jobs, which is more than $1 million per job.

That's a lot of Starbucks!

Labels: economy, jobs, north carolina, South Carolina

Record-low freezing temperatures around the South over this past weekend had a devastating impact on crops that could result in damages in the hundreds of millions of dollars and higher prices for produce in the coming months.

From the Cullman County Times (Alabama):

Spradlin lost 100 percent of his peach crop over the weekend — 2,500 trees in all. He also lost most of his vegetable, blueberry, blackberry and apple crops as a result of subfreezing temperatures Friday and Saturday night.

From the Peachtree Corners Weekly (Georgia):

"The apple and peach crops in North Georgia are wiped out," says [Georgia Agriculture Commissioner Tommy] Irvin. “And middle to south Georgia may have 50 percent or less of the peach crop left.”

[..]

"County agents in the blueberry area are saying that much of the current crop is damaged, some with an 80 to 90 percent loss," Irvin says.

The article says the pecan crop was also affected, but the extent of the damage is not yet known.

The Greensboro News-Record (North Carolina) reports extensive damage to blueberry and strawberry crops:

It's unclear how widespread the damage was. Keith Baldwin with N.C. A&T's Cooperative Extension program said he had anecdotal reports but could not yet estimate what percentage of area crops had been damaged.

[..]

"I think I got completely wiped out," said Ken Fagg, owner of U-Pick Blueberry Farm on North Church Street. "I told my wife I don't believe we have enough to make a cobbler out of them."

The news was much the same at Ma and Pa's Strawberries in Oak Ridge.

"I've got a lot of damage, a whole lot," owner Frank Yost said. "I had some plants seeded in a remade bed with cloth all around them, and I lost all of them."

From the Gainesville Times (Georgia):

State officials say it could be days or weeks before they know the full effect of the weekend freeze that damaged tender fruit crops throughout the state. But Jimmy Echols knows that none of Jaemor's 15,000 to 20,000 bushels of peaches will be produced. He's keeping his fingers crossed that some of the late-season apple crop may make it. But the greatest fear is more serious damage to the trees. Echols' business, Jaemor Farms, is a family operation.

KATV in Little Rock Arkansas reports:

John Post says the Post Familie Vineyards of Altus in Franklin County expects to lose 100% of this year's bunch-grape crop because of the freeze.

The state's wheat crop also likely suffered damage, but the extension service says it's too early to assess the full effect.

The Daily Record in Dunn, North Carolina says that damage to the corn crop ranges from 10% to 20% in some areas to total loss in others. Strawberry crops were damaged, but did better than expected. Not so for apples:

The weekend's freezing weather appears to have destroyed this year's apple harvest in Henderson County, one of the largest apple-growing counties in the Southeast.

Experts said growers throughout the mountain county reported a dire outlook for this year's harvest after temperatures dropped into the teens on Friday and Saturday nights. One local grower said it's the worst damage in more than 50 years, and he would be surprised if any of his crop survives.

"I just can't believe there is anything that will come through with it being so cold for three nights," said Joseph Stepp, owner of Stepp Orchard in Edneyville.

Growers in Henderson County account for more than 85 percent of the apples grown in North Carolina, which ranks seventh nationally, said Marvin Owings Jr., a fruit tree specialist with the Cooperative Extension Service.

Last year, apple growers in the county produced just shy of a full crop with 3.3 million bushels, generating more than $22.8 million in gross returns, Mr. Owings said.

There were similar reports from apple orchards in East Tennessee. According to the Knoxville News Sentinel:

"It pretty well got most everything," said Bill Kilpatrick, owner of the Apple Barn in Pigeon Forge. Kilpatrick has about 3,700 apple trees at the 30-year-old Pigeon Forge landmark.

[..]

Kilpatrick … said what made the cold temperatures so damaging is that they were sustained for several hours as opposed to other freezes that might have lasted an hour or two.

"I'd say we are pretty well done in," he said. He did note, though, that some varieties have secondary buds and growers will just have to wait and see if they come out.

He said the Apple Barn would get apples for cider this year from other growers, but he noted the cold was so widespread across the East that it may hurt the supply of apples.

The Roanoke Times in Virginia reports:

Peaches, cherries and plums were hit particularly hard by the three days of frost, with some farmers already reporting total losses of each crop this year. Some varieties of apples also suffered, as did many grapevines that were already showing shoots -- although many agricultural experts say it's too early to determine the extent of the damages.

The Jackson Sun in Tennessee reports on area corn crops:

Gibson County corn farmers could lose more than $10 million in harvests if this past weekend's frost killed just 30 percent of the county's estimated 60,000 acres planted. Madison County corn farmers could lose more than $2 million if they lose 30 percent of their estimated 15,000 acres planted.

County extension agents and farmers are waiting anxiously for Thursday when they can begin determining the exact amount of crop damage caused by this weekend's historically low temperatures, said Philip Shelby, University of Tennessee county extension director and agriculture agent for Gibson County.

"It (a crop) could be anywhere from totally lost to a percentage," Shelby said.

Crop damage is not confined to the South. The St. Louis Post-Dispatch reports that the Missouri wheat crop may be largely lost, and the Wisconsin Ag Connection reports:

The Easter weekend freeze dealt the wheat crop a severe blow. Temperatures dropped into the teens in northern and central Kansas and the low 20s in southern Kansas. Lows fell to the mid 20s into north central Oklahoma. More than half the wheat crop was in the joint stage in Kansas and some of the crop in the affected region of Oklahoma was in the boot stage. Crop losses could be substantial in that important area of the hard red winter wheat region.

With fruit trees and other annual crops, experts say the damage resulted from unusually warm weather in February and March that caused them to bud out early just before the record-low freezing temperatures hit, wiping out the blossoms and small fruit. In other cases, farmers growing produce such as corn and tomatoes planted early to get a head start on the growing season, a gamble that did not pay off. The freeze had a mixed effect on strawberry crops, because many strawberry farms have irrigation systems that can be run continuously during freezes to protect the plants.

The damage could reach into the hundreds of millions of dollars. Government officials around the South are already talking about declaring a disaster and seeking federal aid. Regardless of the final assessment regarding the extent of the damage, we can probably expect local produce to be scarce and more expensive this year, and small family run farms could be looking at major economic losses.

Labels: economy

The 2007 State New Economy Index by the Information Technology and Innovation Foundation and the Ewing Marion Kauffman Foundation examines a number of key indicators in every state to assess their ability to compete in the emerging global economy.

As Southern states fall all over each other to recruit new auto-manufacturing jobs with big incentives, the report suggests that much of the South is falling behind in a new economy that began taking shape in the post "mass-production and corporate economy" of the 1940's and 1950's.

According to the study, the new economy is defined as "a global, entrepreneurial and knowledge-based economy in which the keys to success lie in the extent to which knowledge, technology, and innovation are embedded in products and services." It has the following attributes:

- Today’s economy is knowledge dependent.
- Today’s economy is global.
- Today’s economy is entrepreneurial.
- Today’s economy is rooted in information technology.
- Today’s economy is driven by innovation.

The report ranks states on 26 indicators that "measure the differences in the extent to which state economies are structured and operate according to the tenets of the New Economy. In other words, it examines the degree to which state economies are knowledge-based, globalized, entrepreneurial, IT-driven, and innovation-based."

In the overall rankings, there are some bright spots for the South (Virginia at 8th, Texas at 14th, Georgia at 18th). But the bottom of the list is populated with the usual suspects (Louisiana at 44th, Kentucky at 45th, Alabama at 46th, Arkansas at 47th, Mississippi at 49th, and West Virginia dead last at 50th place.)

There are other bright spots in some of the individual rankings. Virginia ranks 3rd in knowledge jobs, and Georgia ranks 20th. Virginia ranks 1st in IT employment. Georgia had the fifth highest improvement in workforce education. Texas ranks 2nd in export focus, and South Carolina had the second best improvement for this indicator.

In globalization, Texas ranks 3rd, South Carolina 5th, Kentucky 10th, and Georgia 14th. (One of the factors is workforce employed by foreign-owned companies, so it's possible that the massive foreign investment in auto manufacturing helped Kentucky and South Carolina in this regard. In fact, South Carolina is ranked first in foreign direct investment.)

So, what accounts for the South's overall not so great showing in the results? From the report:

The two states whose economies have lagged most in making the transition to the New Economy are West Virginia and Mississippi, with nearly identical ranks in 2002. Other states with low scores include, in reverse order, South Dakota, Arkansas, Alabama, Kentucky, Louisiana, Wyoming, Montana, and Hawaii. Historically, the economies of many of these and other Southern and Plains states depended on natural resources or on mass production manufacturing (or tourism in the case of Hawaii), and relied on low costs rather than innovative capacity to gain advantage. But innovative capacity (derived through universities, R&D investments, scientists and engineers, and entrepreneurial drive) is increasingly what drives competitive success in the New Economy.

[..]

Regionally, the New Economy has taken hold most strongly in the Northeast, the mid-Atlantic, the Mountain West, and the Pacific regions; 14 of the top 20 states are in these four regions. (The exceptions are Florida, Georgia, Illinois, Michigan, Minnesota, Texas, and Virginia.) In contrast, 15 of the 20 lowest ranking states are in the Midwest, Great Plains, and the South. Given some states’ reputations as technology-based New Economy states, their scores seem surprising at first. For example, North Carolina and New Mexico rank 26th and 33rd, respectively, in spite of the fact that the region around Research Triangle Park boasts top universities, a highly educated workforce, cutting-edge technology companies, and global connections, while Albuquerque is home to leading national laboratories and an appealing quality of life. In both cases, however, many parts of the state outside these metropolitan regions are more rooted in the old economy – with more jobs in traditional manufacturing, agriculture, and lower-skilled services; a less educated workforce; and a less-developed innovation infrastructure. As these examples
reveal, most state economies are in fact a composite of many regional economies that differ in the degree to which they are structured in accordance to New Economy factors.

But, the report suggests that there is an opportunity for the South to leverage it's strengths:

While lower ranking states face challenges, they can also take advantage of new opportunities. The IT revolution gives companies and individuals more geographical freedom, making it easier for businesses to relocate, or start up and grow in less densely populated states farther away from existing agglomerations of industry and commerce. Moreover, metropolitan areas in many of the top states suffer from increasing costs (largely due to high land and housing costs) and near gridlock on their roads. Both factors will make locating in less congested metros, many in lower ranking states, more attractive – especially those with a high quality of life.

So, how did the South get here? Again, from the report's analysis:

The last time the United States underwent a major economic transformation, after World War II, there was a similar reordering as regional labor, capital and consumer markets transformed into national ones. That “new economy” of the 1950s and 60s faced its own “globalization” challenge, but companies were not moving to low-cost Southeast Asia, they were moving to low-cost Southeastern United States. The completion of the Interstate Highway System and the emergence of jet travel, coupled with the mass adoption of air conditioning, electrification, and telephony, opened up the low-wage South as a viable branch plant location. Like today, there were large income differentials, making relocation to the South an attractive way to cut costs. As a result, Northern industries flocked south, leaving behind shuttered factories, devastated communities and unemployed workers.

[..]

Then, as now, low-wage regions established economic development programs and offered substantial incentives to lure industry inside their borders.

There is a warning in there somewhere to Southern states competing to attract "old economy" manufacturing jobs.

The final section of the report outlines a number of progressive policies that states should pursue to be competitive:

In order to succeed in the new global economy, then, a growing share of regions can no longer rely on old economy strategies of relentlessly driving down costs and providing large incentives to attract locationally mobile branch plants or offices. Even low-cost regions will have a hard time competing for facilities producing commodity goods and services against nations whose wage and land costs are less than one-fifth of those in the United States. Rather, regions, even those that followed the low-cost, branch plant path to success since World War II, must now look for competitive advantage in earlier-stage product cycle activities. This strategy can mean either fostering new entrepreneurial activities or helping existing firms innovate so that they do not become commodity producers searching for any number of interchangeable low-cost locations. In short, regions need to be places where existing firms can become more productive and innovative and new firms can emerge and thrive.

The key strategies discussed are:

1. Align Incentives behind Innovation Economy Fundamentals
2. Co-Invest in an Innovation Infrastructure
3. Co-Invest in the Skills of the Workforce
4. Cultivate Entrepreneurship
5. Support Industry Clusters
6. Reduce Business Costs without Reducing the Standard of Living
7. Boost Productivity
8. Reorganize Economic Development Efforts

While there are sure to be controversial elements in some of the specific recommendations, there are a number of thought-provoking ideas here.

For example, "align incentives behind innovation economy fundamentals" means to tie incentives to specific state goals that support the "building blocks of knowledge, innovation, and entrepreneurship." The report also recommends rethinking incentives to accomplish such things as making them contingent on higher wages, targeting distressed areas of the state and enhancing "key industrial centers."

One particular strategy in this regard is quite interesting:

Stress innovation incentives instead of job creation incentives. Forty-five states have job creation incentives. While their goal may be worthy, especially during periods of higher unemployment, the means are not effective. Unless job creation tax credits are very large, they seldom induce companies to hire. Companies hire more workers if they believe that the demand for their products or services is going to increase, not if the government offsets the cost of a new employee by a small percentage.

Indeed, when the state of North Carolina evaluated their job creation tax credits, created by the William S. Lee Act, they found that only about 4 percent of jobs claimed under the Act were actually induced by the tax credits.

There is a second reason job creation tax credits are ineffective. Job creation tax credits try to lower the cost of labor relative to capital, hopefully spurring the substitution of labor for capital. But this is exactly the wrong goal. While developing nations use the strategy of cheap labor as a way to grow, states should instead ensure that their workers have better capital (equipment and skills) so their productivity is high enough to offset developing nations’ lower costs.

The report's recommendations on investing in an educated workforce and partnering with universities to innovate are also good examples of how good business and progressive policies intersect.

The full 92 page report (PDF format) should be required reading for every governor of every Southern state, and anyone else interested in ways to move the South along into the "new economy."

Labels: economy, jobs