[Note: The following position paper was written before the advent of the 2008 economic downturn that continues its grip on our entire nation and much of the world. However, Putnam County's unemployment rate, though much higher than it was before 2008, nevertheless generally remains comparable to that of Florida and the United States as a whole. Compared to nearby counties, as of this writing (March 2009) Putnam has an unemployment rate higher than that of some adjacent counties, such as Alachua, but lower than that of others, such as Marion and Flagler. It therefore still remains true that Putnam County's relatively lower per capita income when compared to other counties cannot be primarily the result of our local unemployment rate. For as bad as unemployment may be here, it is just as bad or worse in most other places, too.]

Putnam Economics:  If We’re So Poor, Why Ain’t We Smart?

Have you noticed that Putnam's county commissioners, the Chamber of Commerce, and sometimes even Palatka Daily News editorials are always telling us how "poor" we are, what a "poor" county Putnam is?  They have been doing this for years, singing that "poor, poor, pitiful us" song to justify handing over hundreds of thousand of our tax dollars to the Chamber of Commerce to pursue "economic development" schemes via a process which involves, among other things, sending Chamber officials on junkets all over the U.S. to try to persuade big businesses to relocate here and offering those businesses millions more of our tax dollars as "incentives."  This approach has brought us Sykes Enterprises, a call center operation that came to Palatka and raked in several million dollars from us, then packed up and left town, and a controversial Wal-Mart distribution center currently planned for the county's southern border, in exchange for which the Board of County Commissioners has promised to help Wal-Mart out with $7,000,000 in public subsidies.  Yet Sykes offered and Wal-Mart will offer wages well below the average wage in Putnam County, and so those jobs actually have the effect of lowering the average wage.

So are we really that poor?  Are we really that desperate?  And if we are, then has anyone bothered to figure out why?  What are the causes of the poverty in Putnam, and are we really taking the smartest "economic development" approach to address the situation?

To justify the use of our tax dollars for their approach to economic development, the Chamber and the County Commission like to remind us that Putnam County has a higher than average percentage of people with incomes below the federal poverty line.  There is no doubt that the average income in Putnam County really is lower than the average for the nation, state, and even most nearby counties.  However, the good news is that the cost of living is significantly lower here, too.  According to statistics published on Enterprise Florida’s website, Putnam County’s cost of living index is only 87.60 on a scale where the Florida state average = 100.  Federal poverty-level statistics are based on income and are not adjusted for the local cost of living or the resultant standard of living.  If that adjustment were made, Putnam County’s poverty rate would be much more comparable to the Florida average.  Put another way, low-income people are not as “poor “ in Putnam County as they would be in most other places, since it doesn’t cost them as much to live here.  

We are constantly told that we need more "jobs, jobs, jobs."  However, contrary to what the Chamber of Commerce and its supporters on the county commission want us to believe, lack of jobs is not the principal reason for the lower average income in Putnam County.  In fact, most of the time unemployment is not really a major problem here.  The unemployment rate fluctuates, of course, and is usually slightly higher in Putnam County than in most nearby counties or Florida as a whole, but it is usually about the same as or even a little better than the national average.  (Most economists consider an unemployment rate of around 5% or less to be, in effect, “full employment," since some people will always be transitioning between jobs even when jobs are plentiful.)

One of the real reasons why the average income is lower here is that the average wage is lower here.  People have jobs, but the jobs pay less here.  Better-paying jobs could help raise the average income.  Adding more low-wage jobs won't. 

However, one thing that many of Putnam County's current leaders evidently fail to understand is that many people who choose to live and work in Putnam County are willingly making the trade-off of earning a little less money in exchange for having a better life.  From highly educated professionals to laborers, Putnam's workers realize that in many cases they could make more money elsewhere.  They know that the range of economic opportunity is almost always going to be greater in an urban area compared to a rural one, and yet they choose the rural area.  They choose to stay here — and some have chosen to relocate here from elsewhere -- because Putnam County's friendly, small-town, rural atmosphere, less stressful lifestyle, and lower cost of living is of greater value to them than the extra money they might earn in a more urbanized area.

One of the main reasons — possibly the most important reason — that average income is lower in Putnam County than in other places may come as a surprise.  Data from the 2000 U.S. Census suggest that Putnam County's lower average income level is probably more a function of the county's unusual demographics than of its modest unemployment rate or even its lower wage scale.  Those census data show that nationally, 12.4% of the U.S. population was over 65 years of age, 19.3% of the population was disabled (had "disability status"), and 63.9% was in the labor force.  The corresponding Census 2000 data for Florida were 17.6%, 22.2%, and 58.6%, respectively.  The corresponding Census 2000 data for Putnam County were 18.5% over 65 years old, an astounding 30.3% disabled, and only 50.7% in the work force.  Statistics published on the Enterprise Florida website show that as of 2007 only 43% of Putnam County’s population was in the labor force.  (The labor force consists of the total number of people who are either employed or seeking employment.)

Those data clearly indicate that Putnam County has higher than average percentages of older (mostly retired) people and much higher than average percentages of disabled (mostly non-working) people, leaving a much smaller than average percentage of people in the labor force.  In sum, in most of the U.S. almost two-thirds of the population is in the labor force, but in Putnam County, because so many people here are either retired or disabled, the labor force is at most only about half the population.

As might be expected with such large percentages of retired and "disability status" persons, the Census 2000 data also showed that 39.7% of Putnam County households received some form of Social Security income.  The Census indicated that the mean annual Social Security income for those households was only $11,175.  (By contrast, households with earnings from employment had mean earnings of $39,102.)  Thus the available data suggest that Putnam County's higher than average poverty rate is not primarily due to unemployment but is largely the result of the higher than average percentage of retired and disabled persons living on small Social Security incomes.  (Cumulatively, of course, all those Social Security payments pump millions of outside dollars into the county's economy.)

So Putnam County's average income will almost certainly remain lower than that of many other counties no matter how many or what kind of jobs become available here, since such a high percentage of the people in Putnam County rely on Social Security (and some private pensions) rather than employment for their incomes.  All the jobs in the world won't raise the incomes of people who are not part of the labor force. 

Does that mean that nothing can or should be done to improve economic opportunities in Putnam County?  Of course not.  What it does mean is that it makes little sense to keep spending millions of our tax dollars to try to bribe big businesses from other places to come here and bring in more low-wage jobs.  Nor does it make any economic sense to help big outside developers come in and turn our agricultural areas into housing tracts, importing tens of thousands of new residents who would compete for existing jobs, clog our roads, crowd our schools, and demand to be provided with public services that would cost far more than the taxes they would pay.

Maybe we should try something else instead.

Suppose that instead of giving all that money to big corporations that will send their profits out of the county, we give a helping hand to our own local businesspeople?  Instead of persisting in an infantile yearning for some big outside company or developer to swoop in and save "poor" helpless Putnam County from its supposed economic ineffectuality, we could redirect our economic development resources to promoting and fostering effective entrepreneurship — including agricultural entrepreneurship — by our own local citizens.  Instead of telling our young people that their only hope for economic advancement is to find a good job working for someone else, we could show them how to start their own businesses and become employers of others.  Instead of giving tax breaks and subsidies to national or multinational corporations, we could give those tax breaks and subsidies to our own hardworking Putnam County business owners and farmers to help them grow their farms and businesses and create good-paying jobs for themselves and their neighbors.  Many of those new and expanded businesses and farms will sell at least some of their products and services to buyers outside the county, thus bringing more money into the county.  Most of them will spend their profits right here in their own community, not send them off to faraway corporate headquarters and anonymous shareholders.

Of course, if big outside businesses want to come here, pay their own way rather than demand handouts, pay our people decent wages, and locate in areas where they won't destroy our neighborhoods and farms, then they should be welcomed.  But meanwhile, let's concentrate our economic development efforts on helping our own local citizens build up our local economy.

Putnam County citizens can build a better economy without urbanizing our beautiful rural county or handing over millions of our tax dollars to outside corporations.  We can reject the inferiority complex that shortsighted county leaders keep trying to saddle us with.  We are not poor.  We are rich in the things that matter most to us.  We are smart enough to save ourselves.  We are smart enough to help each other do it.