Howard Wall is on a quest to find out what makes St. Louis tick and what will make it grow.
In May, he took over as director of the Institute for the Study of Economics and the Environment at Lindenwood University. The institute was founded to apply economics to environmental problems. Now, it is expanding its mission to study and forecast the St. Louis regional economy.
That's Wall's cup of tea. His last job was as an economist at the Federal Reserve Bank of St. Louis, where he started the Center for Regional Economics. The center studies issues affecting the Southern and Midwestern cities and states in the St. Louis Fed's territory. He spent a lot of time there studying St. Louis.
Wall plans to forecast the economy of the St. Louis region. But first he must develop some better measurements. The monthly jobs reports for the metro area are notoriously subject to big corrections as later data arrive. Wall thinks the monthly releases are useless. Other numbers, such as regional income figures, come in months late. All that makes it hard to tell what's happening to the local economy now. Wall plans to massage the data to make it more useful and up to date.
How would you describe the St. Louis economy now?
Stagnant, but not more stagnant than the rest of the country. The places in the country that are doing well are Texas and North Dakota, and some other places that have oil. They alone account for whatever job gains there have been. The best I can tell from St. Louis is that we're not doing any better than the country, and maybe a little worse than the official numbers tell us.
When we recover, will St. Louis also mirror the national economy?
No. Recoveries differ. We'll do better as the country does better, but it matters more what industries you have, the education level, the human capital.
We'll be slightly slower coming out of this. Our education levels are below average in some ways.
What can this region do to improve the St. Louis economy?
My typical response would be to remove barriers to business. But around here, that's not a big deal compared to other parts of the country.
The things we can do are long term. The first is education. I could say education three or four times.
It's not mainly a matter of higher education. We have huge swaths of people who haven't finished high school. We have concentrations of people with little job experience and little education. That's a drag on everything.
Firms set up and expand because a work force that's there. Sixty percent of the people employed in a firm will not be college educated.
A guy once told me story. He was in charge of a retail distribution company. He had three distribution centers in Memphis, New Jersey and California. They did a study to find out how long it takes to train a person on the loading dock. In Memphis, it took 50 percent longer. They start out with less experience, less education. That was an eye-opening anecdote.
People with college degrees move to where the jobs are. People who set up businesses can draw college-educated people in. Other (less-educated) groups are less mobile, and that's the corps you have to build on.
Have other regions done a better job than St. Louis?
There are some success stories of industrial Midwestern cities, such as Indianapolis and Minneapolis.
Indiana gets basic education right. Elementary and high school education is stronger in Indianapolis. Also, Indianapolis wasn't always as big as it is now, so it didn't inherit the issues of older cities such as St. Louis, Cleveland or Pittsburgh.
Minnesota in general is very good in education.
Nationally how long will this economic malaise continue?
Quite a while. The administration did the wrong kind of stimulus. The most effective stimulus is to just give money. Write a check to everybody and hand it out.
The stimulus method that was pursued was to build things. It's not really putting money into the private sector. There are distortions. If you build bridges, you're using workers, concrete and steel that is not available to the private sector.
Alongside this was a big increase in regulation and uncertainty. You can argue that these were good regulations, but you can't argue that it was well timed to apply all these regulations in the middle of the great recession. You can say that health care reform was exactly the right kind of reform, but it's not the time to do it.