Everyone would agree there are vast differences between the Northern economy and the Southern economy. There are vast differences in the way the two operate, which is also one reason why the Great Recession hit the South particularly hard. However, the South’s recovery is picking up speed, and the former Confederate states now have America’s fastest-growing economies. This is due to the fact that they operate in ways that many Northern states and liberals hate: lack of unions, lower wages, fewer regulations, and lack of stringent environmental laws. These are business-friendly policies that appeal to investors and are great for the economy.
Hit hard by the recession, the South took longer to recover than the North, but now has the best states for business in the country. Over-taxation and over-regulation stifle profits and entrepreneurial ventures. Because of this, businesses are fleeing to the South. A review of state business climates by CEO Magazine found that eight of the top 10 most business-friendly states, led by Texas, were from the former Confederacy, while former Union strongholds California, New York, Illinois, and Massachusetts land firmly at the bottom. It’s no accident that most of the states in the top 20 are also right-to-work states. Labor force flexibility is highly sought after when a business seeks a location. Because of this, 10 of the top 12 states for locating new plants are in the former Confederacy, according to a recent study by Site Selection magazine. In 2011, the two largest capital investments in North America, both tied to natural-gas production, were in Louisiana. Southern economic growth has outpaced that the rest of the country for three decades now, and shows no signs of stopping.
The North’s social model of an ever-expanding welfare state and ever more stringent “green” restrictions on business is a terrible recipe for a developing economy. This is illustrated well in President Obama’s home city of Chicago, whose unemployment rate is still double digits, and cannot be chalked up to just being a large city (Houston’s jobless rate is less than 6%). We are seeing these states maintain policies that have kept unemployment and poverty so high in these northern metropolitan areas. The former Confederacy no longer dominates the list of states with the highest share of people living in poverty. N census measurements, adjusted for regional cost of living, place the District of Columbia and California first and second. Today, New York has a higher real poverty rate than Mississippi.
Lower cost of living, more entrepreneurial opportunities, and lower unemployment rates are causing people to flock to the South. The unemployment rate in the region is now lower than that of the West or the Northeast. Last year the Sunbelt region accounted for six of the top eight states attracting domestic migrants — Texas, Florida, North Carolina, Tennessee, South Carolina, and Georgia. Texas and Florida each gained 250,000 net migrants. The top four losers? New York, Illinois, New Jersey, and California. Today, the South is nearly as populous as the Northeast and the Midwest combined, and virtually every major Southern metropolitan region has been gaining educated workers faster than their Northeastern counterparts. Over the past decade, greater Atlanta added over 300,000 residents with B.A.s, more than the larger Philadelphia region and almost 70,000 more than Boston. For people who are poor in the South, the odds are far better for being successful than in the over-taxed and over-regulated North, especially when starting a business. The South passionately believes in individual rights, and this comes through when starting and operating your own business. Some of the biggest businesses in the country are seeing that, as evidenced by the business migration southward.
The region, led by Texas, has moved up the value-added chain, seizing a fast-growing share of the jobs in higher-wage fields such as auto and aircraft manufacturing, aerospace, technology, and energy. Alabama and Kentucky are now among the top-five auto-producing states, while the coastal corridor between Louisiana and Florida ranks as the world’s fourth-largest aerospace hub.
The South prioritizes what should come first in the business industry: people. It may get bashed for its lack of unions, it may get bashed for its lack of environmental laws, but when that lack of laws creates a stronger economy and brings investors to the region, unemployment drops and families can put food on the table. That should be the first priority, and the South is succeeding. It’s time for the North to begin emulating its counterpart. Perhaps then its metro-area unemployment and poverty rates will begin dropping. Numbers don’t lie, and if there was ever a model of which policies work best for an economy and its people, it’s the South.