1. 2008 Business Outlook Summit The State of Northeast Louisiana Prepared and presented by: John Francis, PhD Louisiana Tech University Robert Eisenstadt, PhD University of Louisiana - Monroe

2. The following presentation will be available for review on-line at: cba.ulm.edu/cber

3. First the bad news: NE Louisiana’s official POPULATION continues to decline. RLMA 8 Population is down 2% since 2000

4. But RETAIL SALES continue to show strength…. 2006-07 chg =.87%2006-07 chg = 3.70% 2006-07 chg = 11.8%2006-07 chg = 15.0%

5. And 2 years out, post-Katrina gains in retail sales are durable.

6. NEW CAR REGISTRATIONS in NE LA are down slightly But trucks…

7. And CONSTRUCTION STARTS/PERMITS, though down slightly from 2006, still show relative strength.

8. The inventory of EXISTING HOMES in NE LA continues to rise. Existing homes sold by bracketed price

9. and current selling prices appear reasonably stable… Data Source: NE LA Bd. of Realtors

10. Until you adjust for price changes

11. Constant (2007) $ prices per square foot show less of a decline.

12. There are no significant changes in the number of days homes-sold stay on the market. Some increase in square foot prices appear to be from a decline in average home sizes sold.

13. EMPLOYMENT in NE Louisiana (HH survey) is down slightly…

14. which is consistent with the Quarter 2 Establishment Survey jobs data… (note the red under MLU) -21% LA Dept. of Labor, Laworks.net 2006-07 change f/MLU in red

15. Finally, while current dollar payrolls are generally higher in NE LA, they lag the State (3 year change in orange).

16. Adjusting for inflation, however, reveals weaknesses in payroll growth.

17. Job gains in retail, healthcare, hospitality; losses concentrated in manufacturing, administrative and waste services.

18. Summary and conclusions  Forecasted labor demand for RLMA 8 projects 800 new jobs in the region by 2010.  Projected payroll growth (2007 $) is approximately $15 million or.65% of area wages and salaries.  The above forecast underestimates payroll growth if call center employment rises in accordance with industry forecasts.  300 additional call center jobs can create as much as.5% additional wage and salary growth.  Further (and highly desirable) growth (and economic diversification) can be realized from reoccupation of the former Guide plant.

19. Summary and conclusions  NE LA appears relatively insulated from National economic issues, though the retail trade remains vulnerable to high (and forecasted higher) prices for food and fuel. NE LA never experienced a housing boom and will, therefore, avoid a housing bust. Housing price movements are more a function of population pressure Minimal changes in home prices will allow NE LA to avoid the negative wealth effects experienced Nationally On the downside, NE LA workers are relatively disproportionately affected by inflationary pressures (food and fuel). The relative purchasing power of wages in NE LA is the focus of our next topic

20. Real Wages  It may not be meaningful to compare money wages across locations or over time  Variation in the cost of living  Inflation  Economists use real wages for such comparisons  Measures purchasing power  Real Wage = money wage/price index

21. ACCRA Cost of Living Index  Produced by the Council of Community and Economic Research – C2ER  Center for Business and Economic Research  For each Metropolitan Statistical Area (MSA) we have a cost of living index relative to the national average  National Average = 100  Monroe = 95.6 4.4% below the national average 116 th highest of 234 MSA’s

22. Wage Index and Real Wages  Using data from the Bureau of Labor Statistics we develop a wage index for each MSA relative to the average US wage  US average wage = 100  Monroe = 77.6 22.4% below the national average 214 th highest of 234 MSA’s  Real Wage = Wage Index/ACCRA Index  Gives the real wage in each MSA relative to the national average real wage

23. Wages and Prices

24. Statistical Correlations  In general, wages do not keep pace with the cost of living across MSA’s  For each 10% increase in the cost of living wages increase by only 7.4%  Consistent with reports of falling real wages

25. Relative Real Wage Ranking  Relative Real Wage = Wage Index/Price Index  Shows each MSA’s real wage compared to national average  234 MSA’s in sample 1. Durham, NC 1.29 94. Jackson, MS.93 104. Little Rock, AR.92 152. Shreveport, LA.88 148. Tyler, TX.88 176. Lafayette, LA.85 212. Monroe, LA.81 234. Honolulu, HI.62

26. Similar Sized Cities  How does Monroe compare to other cities close in size?  We ranked cities by population size and examined the 10 cities above and below Monroe in this ranking  Monroe’s real wages are 20 th highest out of 21 cities  Only Las Cruces, NM fared worse

27. Labor Force Participation Rates  Real wages are major determinant of labor force participation rates  Our real wage index explains 30% of variation in participation rates across MSA’s  Given that we have real wages well below the national average we should expect that we have a lower than average labor force participation rate  Monroe – 64.7%  US – 65.9%

28. Real Wages and LFPR’s

29. A Closer Look at the Wage Distribution PercentileMonroeAll MSA’s% of All MSA’s 10 th $13,170$15,89082.9% 25 th $16,600$21,17778.4% 50 th $24,220$32,26075.1% 75 th $37,300$50,92173.3% 90th$54,030$76,38670.7%

30. Educational Attainment Education LevelMonroe – Percent of Population over 25 US– Percent of Population over 25 Less than HS18.3%15.9% HS Degree35.1%30.2% Some College24.6%26.9% Bachelor’s Degree15.9%17.1% Graduate Degree6.0%19.9%

31. Education, Wages and Poverty Education Level Median Wage -- Monroe Median Wage -- US % of US median Poverty Rate -- Monroe Poverty Rate -- US Less than HS$11,941$18,64164.1%34.6%23.7% HS Degree$22,905$26,12387.7%18.8%11.5% Some College$27,414$31,93685.8%14.1%7.8% Bach Degree$37,199$45,22182.3%4.7%4.1% Grad Degree$46,220$59,80477.3%2.3%3.1%

32. Location Quotients  What kinds of jobs do we have relative to the rest of the country?  For any given industry/occupation the location quotient, L, is defined  L = % local employment/% national employment  L < 1 we are below national average  L > 1 we are above national average  L > 1.25 we are an exporter

33. Industry Location Quotients for Monroe

34. Occupational Location Quotients

35. Questions