Dr. Albert Niemi, chair of the business school at SMU, recently shared his annual report and predictions. I have attended his presentation for the last eight years and have found him to be more accurate than not. His U.S. economic reflections and forecasts for 2015 included some important insights that should influence your plans regarding enrollment and fundraising.
Big Growth Expected
The US is experiencing one of the longest periods of economic growth in its history. The economy has now been growing for over 80 consecutive months, approaching new records. Texas, North Carolina, Georgia, and Utah have the best combination of transportation assets, tax policy, and overall business climate to experience the most aggressive growth over the next several years, according to Niemi. The U.S. gross domestic product grew 5 percent at the end of 2014, jobs growth was the highest in 15 years, and lower oil prices are giving consumers an unexpected raise.
It's About Time
On average, the national economy grows 4% annually. The last few years, since the end of The Great Recession in 2009, have seen the slowest economic recovery ever--even in the years following The Great Depression. It has taken 84 months to return to pre-recession levels, which is at least double the amount of time it took to rebound from any other recession.
Labor Force Participation Rate
The labor force participation rate (LFPR) is intended to define the number of people who are either employed or are actively looking for a job. Since 2004 the LFPR has dropped dangerously fast, with too many people giving up on their job search. Statistically, it's very difficult to be hired for a job in your chosen profession if you're unemployed for more than 24 months--at that point potential employers tend to see too many red flags. When the LFPR is taken into consideration, the current effective unemployment rate is around 11%. That makes LFPR a number that is especially important for school boards and administrators because of the impact on tuition and the tax base to support education.
Endangered Species: Middle Class and Manufacturing Jobs
One of the most remarkable trends demonstrated by Dr. Niemi is the rapid and sustained decline of the income level of middle class families. Manufacturing jobs (General Motors, General Electric, Ford, and Chrysler) continue to be replaced by lower-paying retail jobs (Walmart, Starbucks, Target and Kroger). The result is a much wider margin between the income of the top and the bottom.
“In 2013, the median joint tax return was just over $34,000,” Niemi shared. “We’ve become a nation of have and have-nots, which is scary. It’s due to the devastation of the middle class and the types of jobs being created.”
As a wise school leader who recognizes the impact of such economic trends and factors, what adjustments will you make to your school's governance, operations, administration, and learning design in order to grow?