Wyoming Business Tips for April 2

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By guest columnist Chris Gibbons, National Center for Economic Gardening founder

“Are we going to get any jobs back in Wyoming from overseas?” Mark, Lusk

I keep thinking about how this is going to work.

The manufacturing company that left town for Mexico is now paying $2.50/hour. Are they going to move back and pay $30 an hour? $15 an hour? Even $7.50 an hour is three times their current labor costs. What if they are under price pressure? Does that sudden increase in expenses send them under?

Economic Gardening would argue that we are focused on the wrong end of the equation. It seems to me that life just constantly gets worse playing in the commodity game, and parts of the country that compete on being the lowest-cost place to do business also are the places that are hurting.

The typical economic development ad reads something like: “We have the best business climate because we are the cheapest place to do business. We have the lowest taxes, we have the lowest utility rates, we have the fewest regulations, and our people get paid less than our competitors in Third World countries.”

Well, maybe not that blunt, but you get the idea. How does that community ever get richer?

You can bring a company that is under price pressure back to the U.S., but that company is still under price pressure. You can force wages to be raised, but all that does is reset the starting point for reducing expenses -- competitive pressures immediately begin pushing wages down again. And, if you can’t push them down, you replace labor with technology (see a Michigan auto plant for case in point).

The only way you can keep a commodity business in town is to keep driving down your standard of living -- it is a system factor that you cannot escape. It is like gravity: always there, always pulling wages down.  I’m having a hard time making sense of that line of thinking.

Oddly enough, the wealthiest parts of our country also are the most expensive places to do business. Average housing prices in Akron, Ohio, are $93,000 versus $700,000 in San Francisco. Here is a core belief of Economic Gardening: Wealth and good wages are associated with innovation, and poverty is associated with commoditization.

This fact is at the heart of our nation’s problem. The national conversation is spending a lot of time and energy trying to repair the crumbling end of the economy.  We would be better served to think about how we move innovation into the hurting -- read, commodity -- parts of the country. 

A blog version of this article and an opportunity to post comments are available at www.wyomingsbdc.org/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu, or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.