Forward Madison Job Creation Goals: Big Spending to Maintain Status Quo

Regular reader Rod Goeman responded to my Sunday post on Lake County unemployment with a question about whether the LAIC is making progress on its Forward Madison goals. Mention of the LAIC using Forward Madison dollars to win some more handouts from the state government and Citi (and money from Citi is really money from the federal government, right?) inclines me to promote and expand my original response to Mr. Goeman:

When the LAIC announced the Forward Madison program in October 2006, one goal was to create 400 new jobs by 2012. The article refers to a "five-year plan"—Stalin jokes welcome!—so I assume they mean by Jan. 1, 2012.

According to the SD Department of Labor, in October 2006, Lake County had 6,665 employed workers out of a workforce of 6,855 (2.8% unemployed).

Since then, our job count has exceeded 6,665 during seven months: Apr-May 2007, Sep-Nov 2007, and Apr-May 2008. The highest count was May 2007, 6,855 jobs.

Three years into the five-year plan, the Sep. 2009 numbers show 6,415 employed workers out of a workforce of 6,810 (5.8% unemployed). We are down 270 jobs from Oct 2006. The LAIC needs to create 670 jobs in the next 26 months to meet its Forward Madison job creation goal.

Recession or no, a look at historical job growth in Lake County suggests Forward Madison wasn't aiming very high when it started. Go back to the five-year period from January 1990 to January 1995 (the earliest figures available from the Department of Labor). Lake County added 360 net new jobs over that period. And that was low. By January 2000, our average five-year job creation rate was up to 553... and that was with a spate of annual job losses in 1999. The local job market sputtered frequently from 2000 to 2005, but as of December 2005, our average five-year job creation rate over the preceding 10 years was still 472.

Ten months later, the LAIC announces that Forward Madison has raised all sorts of money to produce a five-year job creation rate of 400. Forward Madison was lowballing the historical trend. Forward Madison raised over two million dollars to aspire toward job creation that was no better than the status quo.

Now let me put on my best economic development hat and try to divine why we might have chosen 400 as our jobs goal. Perhaps in 2006, the Foward Madison planners saw evidence that Lake County had exhausted its traditional avenues of economic growth and was falling into decline. Indeed, the following chart of local workforce numbers could support that hypothesis (click image for full size):

Lake County's job growth peaked in 2002. The 12-month moving average (always focus on the general trend, since, as you can see, monthly employment numbers bounce with the seasons) goes flat after that. City leaders could have looked at that plateau and said, "Oh my gosh! We're stagnating! Someone do something!"

Then again, we could look at that spike in jobs from 1999 to 2002 as the aberration. If that's the case, the modest rebound we see in job growth fits rather nicely with the historical trend prior to 1999. under that interpretation, a goal of 400 more jobs from 2006 to 2011 isn't an improvement; it's simply keeping the slope steady.

If you're getting ten hours a week at Gehl, you don't give a hoot about these numbers; you just want to get back to welding skid steers and bringing home a full paycheck.

But two years from now when the LAIC throws a big party celebrating the jobs it has created or saved (yes, the language will sound very familiar), let's be ready to ask whether the program really made a difference or just went along for the ride with the historical status quo.