Generation West Virginia Annual Winter Work Meeting

1. Generation West VirginiaAnnual Winter Work Meeting March 20, 2010

2. Today’s Program: • Introduction • Current Realities • National, regional, statewide economic landscape • Key findings from previous Market Street research • Vision Shared • Generation West Virginia • 2008 work plan • Implementation Progress • Vision Shared • Generation West Virginia • Best Practices in Young Professional Programming

3. Market Street Services

4. Background on Market Street • Founded in 1997 as an alternative to traditional economic development firms. • Located in Atlanta, Market Street maintains a staff of professionals that excel in economic analysis and helping communities create long-term strategies for change. • Our commitment is to a definition of economic development that, at its core, is about personal wealth creation for all citizens and building better communities.

5. Market Street Current Clients Currently, Market Street is working in the following communities: • Birmingham, Alabama • Hopkinsville, Kentucky • Northwest Arkansas • St. Louis, Missouri • Sioux Falls, South Dakota • Southwest Louisiana (Lake Charles) • Waco, Texas

6. Our Work with the State of West Virginia • In 2000 and 2001, Market Street Services partnered with state stakeholders to create West Virginia: A Vision Shared. • The four goal areas of A Vision Shared focused on: • Intellectual Infrastructure in the 21st Century • New Economy: New Challenges and New Solutions • Results-Based Government: Planning for the Future • Building Bridges and Empowering Citizens • From this plan, the Vision Shared, Inc was formed. • Statewide public-private organization focused on implementing this plan and addressing timely issues associated with community and economic development.

7. Our Work with the State of West Virginia Many stakeholders have cited the greatest achievement of West Virginia: A Vision Shared as creating a platform for people from different backgrounds and with divergent points of view to unite around shared values. Vision Shared has helped to bring various public and private stakeholders together, initiating dialogue and forging partnerships that have not previously existed.

8. Our Work with the state of West Virginia • Market Street was engaged in 2008 to assess the State’s strategic opportunities and challenges, and to help chart new and continuing goal areas for Vision Shared, Inc. • This update process included: • Competitive Assessment • Rankings and Ratings • Work Plan for West Virginia

9. Current Realities

10. Current Economic Realities Source: Atlanta Journal Constitution November 4, 2008

11. The Great Recession: Dec. 2007 – Jan. 2010 Total Jobs Lost During Current Recession: 8.35 million 15.3 million unemployed 9.3 million working part time, wanting full-time work. Source: Bureau of Labor Statistics, seasonally adjusted

12. Nationwide Job Losses, 2009 Source: U.S. Bureau of Labor Statistics. Seasonally adjusted.

13. U.S. Economy • Total Job Losses during 2009: 4,781,000

14. “The Lost Decade”

15. U.S. Economy: Job gains and lossesby sector, 2009 Source: U.S. Bureau of Labor Statistics, Moody’s Seasonally Adjusted

16. U.S. Economy Losses and Gains The U.S. economy lost 20,000 jobs in January 2010. Here are a few of the affected sectors: Source: U.S. Bureau of Labor Statistics

17. Household Net Worth 1981-2009 Source: United States Census Bureau, Moody’s Economy.com

18. Food Stamps

19. Consumer Confidence – Going Down Again The consumer confidence index from a survey of 5,000 U.S. households: Seasonally adjusted: 1985=100 Source: The Conference Board

20. Metro Economies Report Projected Employment Change: Q4 08 – Q4 09: Source: U.S. Conference of Mayors; Bureau of Labor Statistics

21. State Unemployment RatesJanuary 2009 (preliminary estimates) Michigan 14.3% Nevada 13.0% Rhode Island 12.7% South Carolina 12.6% California 12.5% D.C. 12.0% Florida 11.9% Illinois 11.3% North Carolina 11.1% Alabama 11.1% Mississippi 10.9% Ohio 10.8% Oregon 10.7% Tennessee 10.7% Kentucky 10.7% Georgia 10.4% United States 9.7% West Virginia9.3% Source: U.S. Bureau of Labor Statistics, seasonally adjusted

22. U.S. Employment Sectors: 1984 Source: Bureau of Labor Statistics

23. U.S. Employment Sectors: 2009 Source: Bureau of Labor Statistics

24. West Virginia and the United StatesEmployment Sectors: 2009 Source: Bureau of Labor Statistics

25. Per Capita Income Source: Bureau of Economic Analysis

26. Unemployment Rate Source: Bureau of Labor Statistics

27. Labor Force Participation Rate Source: US Census Bureau, civilian labor force participation ages 20-69

28. The South: Current Recession Net Job Change in Southern MSAs, 2008-2009 Source: Bureau of Labor Statistics, Current Employment Statistics, Economy.com adjusted

29. The South Net Job Change in the South December 2007 to December 2009 Source: Bureau of Labor Statistics, Moody’s Seasonally Adjusted

30. The South Decline of Manufacturing Jobs December 2007 to December 2009 Source: Bureau of Labor Statistics, Moody’s Seasonally Adjusted

31. The World in 2009 and 2010 “Anyone hoping for a period of calm after the turbulence of the past year will be disappointed. For the economy and for business, as well as for politics, 2009 promises to be a year of bracing adjustment to a changed world.” Daniel Franklin, Editor The World in 2009 The Economist “The good news about 2010 is that the world will emerge from recession and the post-crisis economic landscape will become clearer. Less cheerful is what that landscape will look like.” Daniel Franklin, Editor The World in 2010 The Economist

32. How Far Down?Recession Realities • Mortgage and financial crisis – continuing problems • Huge decline in discretionary (especially retail) spending in 2009; holiday season beat expectations (driven by online purchases). • The continuing decline in housing value, sales, and new construction • Widely fluctuating consumer confidence – down 50% from 2007 • Job losses every month of 2008 and huge losses throughout 2009 – still falling • Federal and state deficits soaring across the country • Commercial Real Estate Market is falling rapidly • Exports have dropped rapidly and are very low • The continuing cost in Iraq and Afghanistan (human and fiscal) – new questions • Enormous stock losses and continuing market volatility • Fluctuating price of oil – rising now • Citizen anger and distrust (AIG, Madoff, TARP, etc.) Source: J. Mac Holladay, October 2009

33. The Great Recession Has Left Us… • The decade of 2000 – 2009 was JOBLESS. While we gained 27 million new residents, we lost 985,000 jobs. • Four in ten Americans have been out of work for 27 weeks or more, the highest since the measure’s creation in 1948. • The civilian labor force has shrunk by 1.5 million people - a record since World War II. • Total loans at FDIC banks dropped 7.4 percent in 2009 - the largest drop in 67 years. • The Standard & Poor’s Index (including dividends) from 2000 through 2009 was -9%: a greater loss than the 1930s. Source: The Economist; Bureau of Labor Statistics; Atlanta Federal Reserve

34. The Great Recession Has Left Us… • Number of homes where the mortgage exceeds the value: 1 in 4. • Over 700 banks are at risk of failing in 2010. • Companies with fewer than 50 employees have accommodated for 41 percent of the total job losses in this recession. This number is five times its share compared to the 2001 recession. • Household debt has declined 3.8 percent from its peak in July 2008 through October 2009. This is the largest decline since 1943. • Auto plants in the Southeastern U.S. have lost 16 percent of their jobs since early 2008. Auto parts manufacturing have lost 20 percent. Source: The Economist; Bureau of Labor Statistics; Atlanta Federal Reserve

35. “Elvis Has Left the Mountain” “First, if it is not apparent to you yet, it will be soon: there is no magic bullet for this economic crisis, no magic bailout package, no magic stimulus…We are going to have to learn to live with a lot more uncertainty for a lot longer than our generation has ever experienced.” Thomas L. Friedman New York Times February 1, 2009

36. Key Issues from the 2008 Competitive Assessment

37. Assessing Competitiveness for Success • People • Population dynamics • Socio-economic health of adults and children • Workforce competitiveness • Economic Performance • Economic structure • Labor market dynamics • Business climate • Innovation and entrepreneurship • Place • Livability (including cost of living, transportation, public safety, housing market) • Environment • Arts and cultural amenities • Civic engagement

38. Competitive Assessment – Key IssueWorkforce supply • Stagnant population growth • From 2000 to 2007, West Virginia had grown by less than 4,000 residents • From 2007 to 2009, West Virginia has grown by nearly 8,600 • Aging population • 43 percent of the state’s population was age 45 or older in 2007, compared to 38 percent nationally • 46 percent of the state’s population was age 45 or older in 2008, compared to 40 percent nationally • People are dropping out of the workforce • Labor Force Participation held steady from 2006 to 2008 at 66%

39. Annual Unemployment Rates: West Virginia and the Nation Source: U.S. Bureau of Labor Statistics

40. Employment and Labor Force Index Source: U.S. Bureau of Labor Statistics

41. Competitive Assessment – Key IssuesWorkforce skills • Solid performance in K-12 investments and programming. • Poor overall student performance in reading, math, and writing. • High school dropout rates lower than the nation. • Public higher education is accessible • Average public tuition – West Virginia $9,992 - United States $12,108 • Improvements in educational attainment… • Percent of adults w/o a high school diploma dropped from 25% in 2000 to 19% in 2006 • Percent of adults w/ at least a bachelor’s degree increased from 15% in 2000 to 17% in 2006

42. …..but West Virginia still lags behind. • Educational Attainment of Adults (ages 25 and older), 2008 Source: U.S. Census Bureau

43. Competitive Assessment – Key IssuesCommunity health and wellbeing • Proliferation of chronic disease. • 3rd highest proportion of overweight and obese adults • Highest total population death rate • Proportion of adults diagnosed with diabetes and hypertension exceed the national average and continues to rise • Elevated infant mortality rates. • Increasing concern related to health insurance coverage and costs.

44. Competitive Assessment – Key IssuesBusiness climate • Judicial system perceived as anti-competitive. • The lack of an intermediate appellate court, record setting punitive damage awards, and the method for electing judges are all circumstances unique to West Virginia and a small number of other states. • Governor Joe Manchin commissioned a study panel, which reported its key findings in late 2009. • Improvements in business tax structure. • The Corporate Net Tax is being phased into reduction through 2014 and the Business Franchise Tax will be phased out completely by 2015. • Workers compensation reform. • One of the most successful turnarounds in state history…and in the nation. • Expanding Broadband coverage.

45. Competitive Assessment – Key IssuesEntrepreneurship and Innovation • West Virginia’s entrepreneurs are prosperous. • From 2000 to 2007, average receipts for non-employer firms grew 17% in West Virginia, compared to 8% nationally • Low patent and venture capital (VC) activity. • In 2007, only 116 patents were issued statewide (or 6.4 per 100,000 residents) compared to about 14 patents per 100,000 residents in most of the benchmark states • In 2006, the state attracted 3.7 million in VC putting West Virginia in the lowest quartile of states in terms of VC disbursements per $1,000 of GDP • Potential economic opportunities in energy and green business. • WVU partnership with University of Pittsburgh and Carnegie Mellon • Center for Economic Options partnership w/ 8 state universities

46. West Virginia:Employment by Sector – pre-recession West Virginia’s Employment and Wages, by Sector, Q3 2005 – Q3 2007 Source: U.S. Bureau of Labor Statistics

47. West Virginia:Employment by Sector – this recession West Virginia’s Employment and Wages, by Sector, Q2 2007 – Q2 2009 Source: U.S. Bureau of Labor Statistics

48. Rankings and Ratings • Economy • Best States for Business, (Forbes): 50th in 2008; moved up to 46th in 2009 • State New Economy Index, (Kauffman Foundation): 50th in 2007; up to 49th in 2008 • Education • Quality Counts, (Education Week): 6th in 2008; moved to 9th (B- overall, but an F and rank of 49 in K-12 achievement) in 2010 • Technology Counts, (Education Week): 1st in 2007; in 2009 given an A and a grade of 100 (tied with 8 other states for top spot) • Quality of Life • Best States for Business, (Forbes): 50th in 2008; moved up to 46th in 2009 • State New Economy Index, (Kauffman Foundation): 50th in 2007; up to 49th in 2008

49. Vision Shared

50. About Vision Shared, Inc Vision Shared brings together a diverse group of public and private interests in order to strengthen the economy of West Virginia. Programs and initiatives fall under four areas: • Intellectual Infrastructure – focusing on early childhood development and seamless education programs • New Economy – supporting entrepreneurship development, sustainable development, and creative communities • Results-Based Government – working with legislature and administration to address issues including long-term health care, energy, environment, and state/federal government relationships • Building Bridges and Empowering Citizens - developing tomorrow’s leaders and building non-profit capacity