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The primary challenge facing the Southeast is elevating the education level of the region's people to meet the demands of the present and future job market. Even as the region has prospered on many fronts and university enrollments continue to climb, the overall quality of kindergarten through twelfth grade education remains below national norms.
The news from university campuses around the Southeast, however, is mostly good. Over several decades, the Southeast's institutions of higher education have expanded and diversified. One of Georgia's major metropolitan institutions, Atlanta-based Georgia State University (GSU), has become a model for quality growth and development. (See the sidebar on GSU.)
Florida alone is home to four schools that did not exist in 1960 but have blossomed into major research universities: the University of Central Florida, the nation's sixth-largest university based on fall 2007 enrollment of 48,497; the University of South Florida, the nation's ninth-largest university, with an enrollment of 45,244; Florida International University, with 38,000 students; and Florida Atlantic, with an enrollment of 26,000.
In Tennessee, the state's premier research institution, the University of Tennessee, Knoxville, is comanager with Battelle of the Oak Ridge National Laboratory, the U.S. Department of Energy's largest science and energy laboratory.
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Regionwide, the number of undergraduate, graduate, and professional students is growing. That number increased 17 percent from 2000 to 2006, to 2.73 million, according to the U.S. Census Bureau. That rate of increase is nearly twice the rate of increase in the overall population of the Southeast during that period.
Despite that impressive growth in college enrollment, every state in the region remains below the national average in the proportion of citizens eighteen to twenty-four years old who are college or graduate school students.
The Southeast also continues to lag the nation in the percentage of adults with at least a bachelor's degree. Among the six states in the region, Georgia—where 26.6 percent of adults twenty-five and older hold a degree—comes closest to the national rate of 27 percent. But the region is moving closer to the national standard. Between 1990 and 2006, the proportion of citizens twenty-five and older with degrees increased more in five of the six southeastern states than it did nationally (see table 1).
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Competitive workforce a critical goal
The Southern Growth Policies Board (SGPB), a nonpartisan public policy think tank formed by the region's governors, in 2007 identified the task of building a competitive workforce as a critical issue for the region. In meetings conducted by SGPB with government, economic development, and business leaders across Georgia last year, common discussion threads emerged focusing on a need for greater emphasis on the importance of education, hard work, and lifelong learning among young people. In particular, the current workforce and younger people need to improve "hard skills" such as reading, writing, math, problem-solving, and science; "soft skills" like work ethic and integrity; and "life skills" such as how to dress appropriately, manage households, and take care of themselves. (See the sidebar on working smart.)
Meanwhile, education throughout the Southeast remains a persistent economic development challenge.
At the K–12 level, no single measure of education is comprehensive. But the Southeast consistently lags national benchmarks in, among other indicators, per pupil public school spending and public high school graduation rates. All six states in the region ranked among the lower half of states in average K–12 education spending per pupil from 1992 through 2005, in constant 2005 dollars, according to a June 2007 report from the Nelson A. Rockefeller Institute of Government at the State University of New York. Florida ranked twenty-ninth, Georgia thirtieth, and the other four southeastern states ranked between forty-fourth and forty-ninth.
In public high school graduation rates in 2005, none of the region's states matched the national average of 68.8 percent, according to the National Information Center for Higher Education Policymaking and Analysis. In that study, Tennessee ranked highest, at fortieth, with a graduation rate of 64.5 percent. All six southeastern states except Louisiana posted a lower rate in 2005 than in 1990, reflecting the national trend in the overall U.S. high school graduation rate, which also slid from 71.2 percent.
Part of the problem may lie at the pre-K level. Studies conducted by the National Institute for Early Childhood Research suggest that states in the Southeast and across the nation have made progress in expanding participation in pre-K education, but there remains variation in teacher educational qualifications, which are a key factor in student achievement.
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The impact of poor education on the economy is stated plainly by the National Center for Public Policy and Higher Education, an independent California-based organization. That group issues a National Report Card on Higher Education that includes reports on each state. The 2006 report, the most recent, noted that in each of the six Southeast states poor educational performance "could limit the state's access to a competitive workforce and weaken its economy over time." In particular, the reports faulted the states for poor high school graduation rates and for low numbers of high school graduates enrolling in college.
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In improving the region's workforce, not only universities and K–12 education but also community colleges and technology-based worker training programs will likely play a critical role. In these areas, the region stacks up reasonably well. Several southeastern states operate highly regarded worker training programs.
Alabama's training initiative, for example, has been instrumental in the state's successful recruitment of several major manufacturing plants in recent years, including ThyssenKrupp and National Steel Car rail car facility, according to state officials.
Florida also boasts one of the nation's leading community college systems, which enrolled 797,000 students in the 2006–07 academic year. The system is designed to help students get the training they need and to boost the state's economy, according to the Florida Department of Education. (See the sidebar on Florida's community colleges.)
Growing pains
The Southeast's explosive population growth has been central to the region's economic success in recent decades. At the same time, that expansion presents its own set of challenges that the region must master if it is to continue to prosper.
In 2007, after decades of huge in-flows, more people left Florida than moved in. Pricier housing, rising property taxes, skyrocketing homeowners' insurance rates, and general economic weakness made the state less attractive to newcomers and second-home buyers. If slowing population growth persists, it will have significant consequences for the Sunshine State's once-booming construction industry, among other sectors.
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In metropolitan areas throughout the region, infrastructure concerns such as water supplies, traffic congestion, and air quality present additional potential growth constraints. Georgia and Florida rank sixth and tenth among states in the longest average commute time, according to the Census Bureau's 2006 American Community Survey, while all six southeastern states rank among the top twenty-five.
In addition, the region relies more on coal-fired electricity plants than most of the nation, meaning it could be disproportionately affected by any measures to curb carbon emissions. Similarly, the settlement pattern of southeastern cities—spread out and dependent on the automobile—makes the region more vulnerable to volatility in gas prices.
The region's growing automotive industry also stands to feel the effects of rising gas prices. That industry embodies the reality that, as the region's overall economy becomes more like the nation's economy as a whole, it also becomes more cyclical and thus more vulnerable to downturns. For example, declining auto sales in 2007, mainly a sign of general weakness in consumer spending, affected production at southeastern assembly plants.
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A firm foundation for the future
Although the region confronts both short-term cyclical stresses and challenges to its long-term economic vitality, it has a firm foundation for prosperity (see table 2). The Southeast has done well in building on its historic strengths: a positive business environment, a favorable climate and attractive destinations, in-migration from other areas of the country, low taxes and business costs, and hitherto abundant natural resources. Additionally, the region has been adept at developing promising new industries—from biotechnology and medical research to high-end manufacturing, accounting, and management services to computer and network engineering. These industries offer the types of jobs in which technology tends to complement performance, adding value instead of acting as a labor substitute.
The region's industrial mix is diverse and resilient as evidenced by industries such as defense-related manufacturing and shipbuilding, which help to offset recent weakness in consumer products manufacturing. In addition, the Southeast's proximity to other national markets is an advantage in the competitive race to attract industry and capital from around the world. In fact, nearly 665,000 jobs in the Southeast are at nonbank, foreign-owned businesses. And in the next few years, European and Asian aerospace, automobile, and steel concerns plan to open large factories in the region, adding to this pool of jobs. According to the latest data available, employment by nonbank foreign-owned firms represents 4.5 percent of U.S. nonfarm employment, or about 5.1 million jobs, and 4.9 percent in the Southeast (see the chart).
As world economies grow increasingly interdependent, the Southeast is well positioned to benefit from international trade. Of the nation's fifty largest ports in terms of total international trade, fifteen are in the Southeast. Strong world demand for regional exports such as industrial machinery, electrical equipment, and transportation equipment, including motor vehicles and auto parts, has bolstered export growth even as other economic sectors weakened.
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Finally, the region's favorable climate and business environment bode well for continued in-migration of residents and jobs. To be sure, the Southeast faces challenges, some unique to the region, others typical of the nation and world. But the Southeast has in its history overcome large obstacles to forge a new prosperity and quality of life. The coming years should be no different.
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