Is Lincoln a loser?

DATELINE: LINCOLN, NE

Report card on city challenged

Lincoln business and political leaders were a lot like typical doting parents reacting to a lousy local jobs market report card from the Milken Institute.

They expect the city to do better.

Lincoln's Metropolitan Statistical Area, which includes Lancaster and Seward counties, was among the "biggest losers" in an annual Milken Institute survey that scores metropolitan areas on their ability to create and sustain jobs.

That meant its score fell farther in the past year than all but four of the nation's largest 200 metropolitan areas.

Wendy Birdsall, president of the Lincoln Chamber of Commerce, expects things to get better, and Mayor Chris Beutler said the data support his plan for improvement.

"In reviewing our past year, we have had numerous successes that will factor into future years' scores," Birdsall said in an e-mail. "There are some significant advances that have occurred in the last couple of years that will affect our ability to recruit and retain high-impact jobs. Those advancements include (Nebraska research and development) tax credits, The Nebraska Advantage Act, more aggressive tax-increment financing policy and the (local) Young Professionals Group.

"This is also a marathon and not a sprint," Birdsall said. "We have to continue to have an aggressive (Lincoln Partnership for Economic Development) agenda and strong involvement from city leaders. These both have occurred."

Beutler said the findings support the strategy he announced to encourage new jobs and new growth in Lincoln.

"We need new investment in roads and infrastructure to stimulate investment and create new opportunities," Beutler said. "We need to partner with the university to make the proposed research park a reality and improve our competitiveness."

Steve Frayser, president of the University of Nebraska Technology Park, isn't so sure the Milken measurement is fair.

"I can't make heads or tails of it,": Frayser said. "I couldn't find any definition of technology-based jobs, which makes me think they have a skewed definition or one that's too broad."

For example, Portland, Maine, drew a bad grade that was attributed in the report's narrative to a base closing. "I'm having a hard time seeing the correlation between new economy jobs and a Navy base closing," Frayser said.

The only mention Lincoln got in the Milken report's narrative is of Goodyear's strike last year.

One of the cities that was a big winner in the Milken ratings was Wilmington, N.C., which Frayser said just had a big port expansion and opened a Verizon customer service center.

"So does that mean we'll jump next year?" Frayser asked, rhetorically, as Verizon Wireless prepares to open its customer service center in Lincoln this month.

Frayser called the Milken data too volatile and said he prefers the Commerce Department's recent release of Gross Domestic Product data for metropolitan statistical areas.

Just last month, the department released experimental measures of economic output by metropolitan areas. GDP by metropolitan area is the measure of the market value of final goods and services produced within a metropolitan area in a particular period of time. GDP is the Bureau of Economic Analysis' preferred and most comprehensive measure of economic activity.

A five-year adjusted growth measurement of those numbers, 2001-2005, published by the State Science and Technology Institute shows Lincoln gained 12.46 percent, 156th of 358, well above the halfway mark. Omaha's five-year GDP growth was 13.29, 138th place.

GDP growth is a better report card than the jobs and income measurement Milken uses, Frayser said.

He did a little comparing of his own among Big 12 Conference cities, and Lincoln's MSA came in fourth, behind Austin, Lubbock and Waco, Texas. The latter two are energy towns, Frayser noted.

"I think most folks would say Boulder is a hotbed of tech-based growth," Frayser said. "Their GDP is dead last in the Big 12." And 352nd of 358 metropolitan statistical areas. Boulder actually recorded a loss in GDP over the five years, according to the government data.

"We're not doing that badly at all," Frayser said.

The Milken Institute is a large and usually well-respected economic research organization begun by Michael Milken, one of the most vilified and admired financiers of the past 30 years. A pioneer of the high-yield bond market that financed a wild spree of hostile corporate takeovers in the 1980s, Milken was indicted on scores of federal securities charges, bargained a plea and served two years in prison. He recovered from cancer and has devoted his life since to philanthropic work.

Perry Wong, senior managing economist for the institute, studied Lincoln's results. He said people certainly should pay more attention to the city's longer-term trends than to the one-year decline, and act accordingly.

"I like to take a longer perspective," Wong said. "We need to remind people that the long-term path for Lincoln is still pretty good," Wong said. "I wouldn't call it solid, but pretty good.

"The one-year performance is not very good. It really, at least, decelerated in growth. Five-year growth is OK, decent. Income growth in Lincoln has been pretty good, until the past six, seven months.

"The five-year Lincoln (income) growth was in the top one-third. It's a very good indicator. It means you have the right mix of industry. Some places have very high job growth rates but slow income growth."

"One particular item I'd like to point out, it's a structural issue: the technology content of the local economy can do better."

Lincoln's "pretty sizable" manufacturing sector, the state capital and the presence of the university are fine, Wong said, but the city would be well advised to emphasize new technology as a goal for the long term.

"Uncertainty is very high about manufacturing in the region," he said. "The most recent performance by manufacturing contributed very little to growth. The information sector has declined compared to '06. Probably we should pay some attention to the technology and information sector.

"Lincoln is not going to decline," Wong concluded. "It's a region that should be very stable with education, research and development and government.

"Now we need to find a driver to push the economy,"Wong said. "We are not growing ahead or above the national average."

Reach Richard Piersol at 473-7241 or dpiersol@journalstar.com

LINCOLN'S SLIDING SCORES

Lincoln's Metropolitan Statistical Area was among what the Milken Institute called "the biggest losers" in its Best Performing Cities ranking of the largest 200 metro areas. Lincoln's MSA fell farther in the rankings than all but four other cities: Portland, Maine; Albany-Schenectady-Troy, N.Y.; Stockton, Calif.; and Green Bay, Wis.

The institute says its index ranks U.S. metropolitan statistical areas based on their ability to create and sustain jobs. It includes both five-year and one-year measurements of employment and salary growth. There are also measurements of technology by its growth and concentration, included because of the institute's belief in technology's crucial role in regional economic growth.

Lincoln's MSA lost ground from last year, compared with other cities, in every category. The biggest gainers were cities damaged two years ago by Hurricane Katrina, except for Peoria, Ill.

Here are some of the scores:

LINCOLN MSA THIS YEAR

Overall rank: 149, MSA population: 284,000

(the last two sets of numbers in each row are score, rank)

5-yr job growth (2000-2005), 99.20, 120

1-yr wages & salaries growth (2003-2004), 98.29, 155

5-yr wages & salaries growth (2000-2005), 103.44, 86

Job growth (Mar06 - Mar07), 1.30%, 105

5-yr relative high-tech GDP growth (2000-2005), 73.60, 194

# of high-tech GDP location quotients over 1 - 2005, 6.0, 79

Location quotients measure the concentration of the technology industry in a particular metro area compared to the national average. Lincoln's highest quotients are in: pharmaceutical and medicine manufacturing, communicatons equipment manufacturing, medical equipment and supplies manufacturing, wired telecommunications carriers, data processing services and medical and diagnostic labs.

LINCOLN MSA LAST YEAR

Overall Rank: 72, MSA population: 278,201

(the last two sets of numbers in each row are score, rank)

5-yr job growth (1999-2004), 101.31, 92

5-yr wages & salaries growth (1998-2003), 101.98, 83

Job growth (July04 - July05), 2.35%, 41

1-yr relative high-tech GDP growth (2003-2004), 100.67, 78

# of high-tech GDP location quotients over 1 - 2004, 9.0, 48

OMAHA-COUNCIL BLUFFS MSA

Overall Rank: 104, MSA Population: 823,000

Last year: 114

(the last two sets of numbers in each row are score, rank)

5-yr job growth (2000-2005), 99.35, 118

5-yr wages & salaries growth (1999-2004), 101.06, 112

Job growth (Mar06 - Mar07), 1.85%, 64

5-yr relative high-tech GDP Growth (2000-2005), 111.28, 38

High-tech GDP location quotient - 2005, 0.76, 98

--Source: Milken Institute, www.milkeninstitute.org